Remortgage of HMO within a block of flats

Written by Agata Lovelock (nee Rogozinska)

The client: A company director looking to remortgage his investment property. The client currently owns one investment property and has two years’ landlord experience.

The property: Situated in the centre of London, the client owns a modern 3-bed HMO within a 6-storey block of flats. The property is in an ideal location for professionals working close by with its excellent commuter connections and abundance of shops and services. In the flat, there are currently four tenants.

The finance: Coming to the end of its initial term, the client approached Mortgages for Business to find a new 2-year fixed rate before entering the variable rate period on his mortgage. The client required a borrowing of 75% LTV for his remortgage and requested a competitive rate.

This was a complex case as only a few lenders will accept HMOs within a block of flats. We took into consideration the client’s requirements when searching for a suitable product to allow a swift start to the application and to make sure we were approaching the right lenders.

As the property had only four tenants, it was not classed as a large HMO and the council did not require a licence in this case.

The application process: As well as the usual documents required for the application, our chosen lender also asked to see proof of rental income from the client to make sure that this would cover the mortgage payments.

Within three weeks of submitting the application to the lender, a mortgage offer was made.