Can get an HMO mortgage as a first time buyer and first time landlord?

If you are a first time buyer landlord looking to jump straight in to a high yielding area of property investment, than you may have set your sights on an HMO mortgage (a loan secured against a House of Multiple Occupation).

This is a very practical way of looking at rental property for income generation. This property type is one of several routes to potentially higher yields. 

From a risk perspective, the property set-up is more complex and as such many lenders do not offer HMO mortgages. Where this product type is available, some HMO lenders require an applicant to have buy to let experience or at the very least existence of managing a residential mortgage on their own home.

Without the support of a specialist broker behind you, it’s very easy to be told ‘no, that’s not possible’,  when enquiring about investment opportunities, as not all lenders accept first time buyers going straight down a rental property investment path, before buying their own home to live in. Additionally, not all brokers have access to lenders who can help, despite the fact that there are some available to you.

The case study we discuss in our video below looks at exactly this this scenario. Find out how we helped this client:

Video guide transcript: Investigating HMO mortgages as a first time buyer

“A client approached us looking to get his first step on the property ladder. He had been provided accommodation by his employer, so hadn't needed to buy his first home.”

“He actually took a quite interesting route into his first investment. He didn't go for a standard single tenant unit property, he went for an HMO or House of multiple occupation. 

“Each of the bedrooms had its own kitchenette, but there was shared bathroom spaces. 

“Now that could have strayed either into a Multi-Unit Freehold Block, or an HMO (House of Multiple Occupation), lending area. [Multi-Unit Blocks typically comprise a full living space behind a lockable front door within a building, whereas an HMO normally has bedrooms that can be locked, but communal living spaces] 

“But typically, those rates are the same, because if a lender will do an HMO, they will do a Multi-Unit Block. We were able to get him a lender, who would accept him as a first-time buyer, and get him on to the property ladder, so that he had an investment in bricks and water to prepare for his future.”