HMO Refurbishment Mortgages

HMO or Multi-Let?

Landlords or property owners looking to renovate their rental properties often find securing the funding they need challenging. In these situations, HMO Refurbishment Mortgages may be available to help fund needed renovations or construction projects.

These mortgage loans can be used for traditional HMO properties, houses in Multiple Occupancy properties, and even Multi-Tenant buy-to-let properties. Some vital information must be reviewed when considering this type of funding.

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 occur without holdings.

What types of refurbishments are covered by HMO refurbishment mortgages?

Some examples of the construction that HMO Refurbishment Mortgages cover include window and door replacements, electrical rewiring, 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 must be completed within six months of obtaining the loan. After the construction projects are complete, landlords must 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, purchasing and refurbishing 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 discuss your unique situation and help match your needs with the proper funding type.

Conversion Finance

Some of the same lenders can offer conversion finance at similar loan-to-value rates and terms.

Structured mortgages – Renovation finance

Some 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 to free up his capital and go on to 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 as collateral.

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How much cash can I get?

You can release 70% of your property’s value. For example, if your house is valued at £200000, you can get £140000.

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