HMO Mortgages For First-Time Landlords

We help first-time buyers and first-time landlords with no landlord experience find great HMO mortgage deals from the UK’s leading lenders.

While experience is preferred, there are now several lenders that can offer HMO mortgages for landlords with no experience, with rates starting from 3.94%

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    Helping First-Time Landlords Find Great HMO Mortgages

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    Getting an HMO mortgage with no landlord experience

    A House in multiple occupation (HMO) can be a great rental investment, but purchasing an HMO as your first buy-to-let property can be challenging to finance. This is because the vast majority of HMO mortgage lenders will require you to have experience of being a buy-to-let landlord. If you are a first-time buyer then options will be even more limited.

    Our first-time HMO mortgage guide will explain everything you need to know about funding your first HMO investment property without having the required experience.

    This guide specifically focuses on first-time landlords and first-time buyers, but if you would like to find out more about HMO mortgages, then please visit our HMO Mortgage Guide for a broader overview.

    First-Time Landlord HMO Mortgages

    Author: Darren Ferguson – Mortgage Specialist & Owner

    First Published: 22nd June 2023

    Last Updated: 29th January 2024

    Read Time

    Read Time – Approximately 5 Minutes

    Our guide for first time HMO landlords should be helpful, but it’s always best to speak with an adviser to discuss your circumstances and get the best advice. Call us on 01604 212879 should you have any questions.

    Can I get an HMO Mortgage without landlord experience?

    Yes, you can. There are now several lenders that can provide HMO mortgages to applicants who do not have current buy-to-let landlord experience. The lenders available will depend on whether you are an existing homeowner, known as an ‘owner occupier’, or a first-time buyer with no current property ownership.

    What experience do you need to get an HMO Mortgage?

    Typically, to get rates from the whole market, most lenders will require a minimum of 12 months of landlord experience, but with some lenders, this can be up to 2 years.

    In the current market there are around 5 or 6 lenders that can offer HMO mortgages to first-time landlords, with a much smaller pool of 1 or 2 lenders offering HMO mortgages to first-time buyers.

    The same criteria generally apply to lending against multi-unit freehold blocks.

    Typically, HMO applicants we speak to fall into one of the following categories:

    • First-time buyer (never owned a property)
    • First-time Landlord (homeowner, no other properties owned)
    • Existing Landlord (typically a homeowner who has owned one or more buy-to-let properties for more than six months)

    Call us on 01604 212879 to get a no obligation HMO Mortgage quote

    HMO Mortgages for first-time buyers

    As a first-time buyer, your mortgage options for purchasing an HMO property will be very limited to a small number of lenders.

    Subject to a clean credit profile, the following terms are available for first-time buyers purchasing a HMO property.

    • Maximum LTV – 85% – this must be inclusive of any lender fees to be added to the loan.
    • Maximum of 6 rooms
    • Interest-only or repayment options are available
    • Individual or Limited Company ownership acceptable

    Rates starting from 5.19% for first-time buyer HMO purchases. (as of 14/05/24)

    We recommend speaking to an adviser to understand your HMO mortgage options as a first-time buyer.

    A further option for consideration is bridging finance, which we’ll explain in more detail a little further down the page.

    HMO Mortgages for first-time landlords (homeowners)

    As a first-time landlord with no buy-to-let experience, your options will still be restricted, but there are a good number of standard HMO lenders who can consider lending to first-time landlords.

    You’ll need to own your own home, and the lender will likely restrict their criteria to small HMOs only, which is typically a maximum of 6 rooms.

    The following are the current criteria guidelines for a first-time landlord HMO Mortgage:

    • Maximum LTV – 85%
    • HMO’s up to 6 rooms
    • Interest-only or repayment options are available
    • Individual or Limited Company ownership is acceptable

    Rates start from 3.94% for first-time landlord (owner-occupier) HMO purchases. (as of 14/05/24)

    We recommend speaking to an adviser to understand your HMO mortgage options as a first-time landlord.

    Please visit our rates page to view the latest HMO mortgage rates.

    Call us on 01604 212879 to get a no obligation HMO Mortgage quote

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    Why do HMO lenders require landlord experience?

    This is simply because an HMO property requires a greater level of management than a standard buy-to-let property requires. Multiple tenants can be more challenging to manage than a single tenant, and having some experience managing an existing tenant will help strengthen an application.

    If the property is managed through a letting agent, this can also help.

    HMO Criteria will vary from lender to lender and it’s important to seek advice to understand your options.

     

    Get the best HMO Mortgage advice

    Speak to an HMO mortgage expert today, and we’ll search the market to find the best deal for you.

    We can help with:

    • First-time buyer and first-time landlord HMO mortgages
    • Limited Company HMO Mortgages
    • Adverse Credit HMO mortgages
    • No minimum income HMO mortgages
    • Rates from 3.84%
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      What else do I need to know?

      There are a few additional points to note as a potential HMO landlord:

      • If you are a first-time buyer, lenders will want to understand your reasons for buying an investment property as your first property purchase rather than your first home, as this would be the typical first purchase for a first-time buyer.
      • Lenders typically only offer HMO products to first-time landlords for small HMOs of up to six rooms. 
      • You’ll typically need a clean credit profile.

      Do I need a minimum income as a first-time HMO landlord?

      No, we have lenders that can offer HMO mortgages to applicants with no minimum income requirement, but you will need to be in employment or self-employed for a minimum of 12 months. While there is no minimum income requirement, you will still need to provide evidence of an income. 

      Can I get an interest-only HMO mortgage as a first-time landlord?

      Yes, you can. Interest-only and full capital repayment options are available from lenders, and interest-only is typically the chosen method of repaying the mortgage.

      If you want to learn more about interest-only, buy-to-let mortgages, visit our interest-only buy-to-let guide.

      Is there anything I can do to strengthen my application?

      You could consider partnering with someone with the required landlord experience or an existing homeowner.

      This can sometimes help satisfy lender criteria, especially if the property were to be purchased into a limited company owned by the two applicants. This might be a close family relative, for example.

      The benefits of doing so might include:

      • Increased chances of the mortgage application being accepted.
      • You could potentially benefit from better rates as you may have a larger pool of lenders to choose from
      • The additional applicant may be able to provide helpful advice based on their experience of managing tenants from other properties owned.

      At a point when you come to refinance the mortgage, you could then look to remove the additional applicant, subject to their agreement, as you’ll then have the required experience to satisfy lender criteria.

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      How do i apply?

      Applying for a HMO mortgage is simple, and we can typically get a decision in principle the same day. Call us today on 01604 212879 to see how we can help.

      Are there any other options for first-time buyers with no landlord experience?

      As a first-time buyer, the number of lenders and products will be very limited, and rates will be at the top end. The products available may also tie you in for some time, perhaps up to 5 years with some products. After some time has elapsed, potentially as little as six months, and now that you have gained some experience, you might want to refinance the mortgage to a lender offering more preferential rates. If the product initially opted for has high early repayment charges, this might make it cost-prohibitive to do so.

      A further option for consideration, if mortgage options are limited, is to consider using bridging finance as a means to purchase the HMO and then refinance the property to clear the bridging loan once you have sufficient experience.

      Bridging lenders are generally more flexible than mortgage lenders, as the decision to lend is more asset-based than applicant-based. Bridging rates are typically higher than mortgage rates, but you may find them comparable to those of a specialist lender.

      The benefit to bridging as a first-time HMO landlord is that bridging lenders do not typically charge early repayment charges for repaying the loan early, meaning you could potentially refinance to a standard HMO mortgage lender earlier than expected without paying high early repayment charges.

      At the time of writing, we have a lender that will allow you to refinance onto an HMO mortgage from day 1 of purchasing the property on a bridging loan because you are now a property owner at the point of application.

      There are some risks with bridging finance, and if you want to learn more about bridging, we recommend you read our bridging finance guide.

      Risks include:

      • Bridging is a short-term loan, typically for 12 to 24 months.
      • Therefore, you need to be as sure as you can that you have a suitable exit strategy lined up to repay the bridge within the required timeframe.
      • If you cannot repay the bridge within the loan term, you may be charged more fees and or a higher rate of interest on the loan, or the lender may recall the loan.

      If you are a first-time HMO landlord, we strongly recommend you call us to discuss your options in more detail and see if this could be a viable option.

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      How To Apply

      Its simple to apply, just call us on:

      01604 212879 and we’ll handle everything for you.

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      It’s not just about the property. You’ll need to meet specific criteria, so it’s important we understand a little about your background to make sure we find the best option for you. Time spent at the front end is time saved at the back end!
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      Lets talk property

      We’ll need to know all about the property, such as value, type, location, income and ultimately, your plans. The more we know, the better, and we’ll guide you through what we need to know.
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      Lets talk options

      Time to piece it all together and talk about your options. We’re firm believers in straight talking, so we’ll tell you what can and can’t be done and present you with options best suited to your requirements.
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      If you’re happy with the options discussed, it’s time to get things moving and get an agreement in principle. We’ll handle everything and support you along the way to help ensure your application is as smooth as possible.

      Find out how much you could borrow with our guide to BTL stress testing

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      If you are looking to buy your first home our residential mortgage guide can help

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      Frequently Asked Questions

      Will I need a minimum income as a first time HMO Landlord?

      No, some of our lenders do not have a minimum income requirement to lend to a first time HMO landlord. You’ll just need to be able to evidence an income. 

      Can I live in the HMO myself?

      Most lenders will not allow you to live in the HMO, but again there are 1 or 2 exceptions. If you intend to occupy less than 40% of th property, then yes, its potentially possible that you could live in the HMO. Call us to discuss.

      Thanks for reading our First Time HMO Landlord Guide!

      A selection of some of our HMO Mortgage Lenders

      We source our HMO mortgages from the whole market, from the leading High St Banks & Building Societies to specialist buy-to-let mortgage lenders. A selection of our HMO Mortgage lenders is shown below. Please note that not all of these lenders will lend to first time HMO landlords.