Commercial mortgage for non-homeowners purchasing 14-bed HMO
Client: A married couple, originally from Poland, who have been living in the UK for more than 10 years. The husband is an experienced, full-time HMO landlord. The wife is employed in the health and beauty sector. Although they do not currently own their own home in the UK, they have done in recent past and as result of the sale have savings of c£100k.
The property: A fully occupied, 14-bed licensed HMO in a busy West Country which the couple own on a leasehold basis. The freehold of the property came up for sale and the couple were given first refusal rights to buy.
The finance: Keen to purchase the freehold, the clients approached several high street banks for a mortgage but without success. They also approached a few mortgage brokers who were unable to help. Their main challenges were:
- The couple do not own their own home or any other property – most buy to let lenders insist on this as a minimum requirement.
- The HMO has 14 bedrooms – too many bedrooms for even some of the specialist buy to let lenders.
Finally, a landlord-friend pointed them in our direction. We immediately knew which lender would consider the case, so got in touch. As expected the lender’s business development manager said that they would be happy to accept the case, although it would be underwritten on commercial terms rather than on a buy to let basis.
The application process: We then worked with the couple to put together the supporting documentation for the mortgage application. This included two years’ worth of the husband’s trading accounts and six months’ personal and business bank statements. After the application was submitted, a valuation was booked.
The surveyor’s report confirmed that the property was suitable security for loan, and the business manager confirmed that they would be happy to offer one of their buy to let rates. We then worked with the couple, the lender and the solicitors to get the mortgage through to completion.
Here are the details: