HMO Mortgages For First Time Landlords

HMO Mortgages For First Time Landlords

Are you a first time landlord looking to increase your rental yield by purchasing an HMO? Find out more here.

Is it possible to get HMO mortgages for first time landlords?

The good news is that there are lenders that can offer HMO mortgages to first time landlords.

Managing an HMO property differs from a standard buy to let due to the number of tenants within the property and the additional restrictions.

As a result, some lenders require landlord experience before they’re happy lending to them on an HMO property.

However, this is not the case for all HMO lenders; some are happy to offer an HMO mortgage to applicants without letting experience.

If you are thinking of purchasing a property to rent out as an HMO, make sure that you have done your homework and know what is involved.

When choosing a mortgage, as an HMO investor with no letting experience, you should find a competent, qualified mortgage adviser who can guide you on your mortgage options.


An expert mortgage adviser on the phone speaking to a customer

Do all buy to let lenders offer HMO mortgages to first time landlords?

Not all buy to let lenders offer HMO mortgages to first time landlords.

Some HMO mortgage lenders require you to own an HMO property to demonstrate that you know what you are doing when running it.

Other HMO lenders allow you to take an HMO mortgage when you only have a standard buy to let experience.

Some will lend to you when buying an HMO property when you have never rented out a property in the past.

Taking expert advice is strongly recommended in this situation.

Can first time buyer landlords get HMO mortgages?

First time buyers can also qualify for HMO mortgages. However, there are very few lenders that offer this.

Mortgage lenders generally want to see that an applicant has at least some experience owning a property rather than diving straight into becoming an HMO landlord.

The lenders that will lend to first time buyers for HMO properties would need a complete understanding of your situation to ensure that they are comfortable lending to you to purchase an HMO.

Is an HMO mortgage more expensive than a buy to let mortgage?

You will likely find that an HMO mortgage is more expensive than a standard buy to let mortgage.

This is because lenders believe that HMO properties are a higher risk than standard residential buy to let properties.

It may be that the property has been adapted for it to become an HMO.

If this is the case, if the property were to be repossessed if the mortgage was not paid, it may appeal to a smaller market than a standard property.

HMO lenders also believe there is a higher chance of an HMO property being neglected or mistreated due to the number of tenants that come and go within the property.

This is not always the case, but many HMO investors have to pay significant amounts to repair HMO properties following damage from tenants.

First time landlords HMO property

I’m a first time landlord. Will I make more money with an HMO?

Generally speaking, an HMO investor would make a greater yield on their property than a standard buy to let investor renting a house out under just one tenancy agreement.

For instance, a 5-bedroom house that achieved £1,500 per month would give you an income of £18,000 per annum before costs.

Let’s say that this same property was let as an HMO, and the dining room was able to become a bedroom, too; this would mean that six bedrooms are now available for let.

If the property were let at £500 per room per month, this would give an income of £3,000 per month, equating to an annual income of £36,000.

Although the property would likely generate more income, it would have higher costs too. HMO landlords usually cover all property bills, which means paying out council tax, electricity, gas and water.

Could I hire a property manager?

If you hire a professional manager to run the property daily, they would usually charge a higher percentage than a standard letting agent.

With tenants coming and going more often than with standard buy to lets, you should expect to pay more fees to agents each time that you get a new tenant.

Most of the time, you would still be left with more money when running your property as an HMO at the end of the month.

This assumes that the majority of your rooms are occupied. This extra income is often not passive.

Does managing an HMO require more work than a standard buy to let property?

Running an HMO property requires more work than a standard buy to let property.

This is because multiple people are living under one roof, and there are restrictions from the council as to what is expected of the property.

Although you may earn more money for owning and renting out an HMO, there will likely be more work for you to undertake. An example could be the refurbishment required between tenancies. Read more: Single Occupancy Versus HMO For Profit.

Happy mortgage broker giving free mortgage advice over the phone


HMO mortgages for first time landlords with bad credit

Getting an HMO mortgage for a first-time landlord may still be possible, even if you have bad credit. Not all lenders will lend to first time landlords with bad credit, so finding an experienced mortgage adviser with a background in recommending HMO mortgages and credit impaired mortgages would be beneficial.

Bad credit can come in many forms, such as individual voluntary arrangements, arrears, defaults, bankruptcies, payday loans, county court judgements, debt management plans, etc.

Lenders would need to know what your bad credit consisted of to determine the severity of the bad debt, why it occurred and why it won’t happen again.

You should always tell your mortgage adviser full details of your adverse credit, so they know which lenders to look at when placing your mortgage.

You can go to Check My File and sign up for a free trial to know more about your credit history.

Do you need a specialist mortgage broker for HMO mortgages for first-time landlords?

If you are considering an HMO mortgage, whether you are a first-time landlord or not, the mortgage products are specialists.

As a result, it is always recommended to look for an experienced mortgage adviser who arranges HMO mortgages regularly.

Lenders are constantly changing their products and criteria, and it can be hard to keep up.

This is why finding an active mortgage broker in this department is prudent, so they know which lenders to look at in your situation.

Please complete the contact form if you would like I NEED ADVICE to match you with an experienced and qualified mortgage adviser who can tell you your options for HMO mortgages.


It is certainly possible to get an HMO mortgage, even if you are a first time landlord.

There are even lenders that are willing to consider HMO mortgages for first time buyers like they would on a buy to let mortgage.

If you want to buy an HMO property, ensure you have researched to understand what is expected of you as an HMO landlord so you do not fall on the wrong side of the law.

HMO mortgages are usually more expensive than standard buy to let mortgages.

This is because the products are considered specialist lending.

As a result, you should look for a specialist HMO or buy-to-let mortgage adviser with experience in similar transactions.

If you would like I NEED ADVICE to match you with a regulated, experienced mortgage adviser, please complete the contact form.

The information on this page is not tailored to any individual readers and should not be considered financial advice under any circumstances.

If you are seeking advice about a mortgage, you should consult a qualified professional.

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