HMO or Multi-Let?
Landlords or property owners looking to renovate their rental properties often find it challenging to secure the funding they need. For these types of situations, HMO Refurbishment Mortgages may be available to help fund needed renovations or construction projects. These mortgage loans can be used for both traditional HMO properties or Houses in Multiple Occupancy properties, and even Multi-Tenant Buy to Let properties. When considering this type of funding, there is some vital information to review.
Requirements for HMO Renovation Mortgages
HMO Refurbishment Mortgages can be used for renovating large, multi-room properties that do not have an HMO license or any current tenants. While lenders generally require borrowers to have a license and a rental income before borrowing, an HMO Refurbishment Mortgage provides a unique opportunity to meet the landlord’s current needs. This type of financing can cover up to 60 per cent of the property’s value or purchase price and allows renovations to take place without holdings.
What Types of Refurbishments are covered with HMO Refurbishment Mortgages?
Some examples of the construction that HMO Refurbishment Mortgages cover includes window and door replacements, re-wiring electrical, updates to shared areas like the kitchen, bathroom or shower room, fire safety device replacement, exterior or interior redecorations and replacement of fixtures, carpets, and curtains. These refurbishments to the property will need to be completed within six months of obtaining the loan. After the construction projects are complete, landlords will then be required to obtain an HMO license for the property and arrange tenants for all rooms within the building.
Ideal Applications for HMO Conversion Mortgages
HMO Refurbishment Mortgages can be used for almost any size property or configuration. These loans are suitable for landlords looking to improve their portfolio of properties, those looking for higher rental incomes, the purchase and refurbishment of a potentially un-lettable property and those who wish to avoid using more expensive bridging loans for their development project. If you are unsure if an HMO Refurbishment mortgage is right for you, contact a professional mortgage or lending broker to talk through your unique situation and help to match your needs with the proper funding type.
Some of the same lenders can offer conversion finance at a similar loan to value rates and terms.
Structured mortgages – Renovation finance
Some of the lenders available to Ravenwood clients understand the milestones of a renovation project and will lend and effectively re-lend throughout the project. A risky renovation project can start with a lower loan to value, offering the lender more security. When the property is finished and ready for tenants, the lender will evaluate the refurbished property and release cash reflecting the higher loan to value. This allows the property investor the ability to free up his capital and go onto the next project.
For an even higher geared developer, bridging finance can be arranged for 100% or more of the purchase price, where another property is available to act as collateral.
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How much cash can I get?
You can release 70% of your property’s value. As an example, if your house is valued at £200000 you can get £140000.
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