Until recently, getting a competitive HMO mortgage in Scotland was difficult as very few lenders offered them. Last week, two major lenders who specialise in HMO mortgages opened their criteria up to Scottish properties! Consultant broker, Luke Worrell, explains what they’re offering…
Why the change?
HMOs are popular with landlords, due to their potential for higher yields compared to vanilla buy to lets. Plus, with several popular universities in Scotland, the student demand for these types of properties is just as high as in the rest of the UK.
Until last week, if you wanted a mortgage for an HMO property in Scotland, you had a choice of just a handful of lenders. While one of these had a generous maximum bedroom limit, none offered particularly competitive rates compared to those available for properties in England and Wales.
Now that 2 of the largest providers of HMO mortgages accept applications for Scottish properties and offer competitive rates and decent upper bedroom limits, it is good news for landlords investing north of the English border!
Who are these new HMO mortgages available to?
Both these lenders accept applications from individuals and SPV limited companies, who are either purchasing or remortgaging HMO property. While one accepts a maximum of 6 bedrooms, which is pretty standard for HMO lenders, the other has a slightly more generous maximum of 8!
While one lender doesn’t require a minimum income, the other asks for at least £30,000, which can be split between multiple applicants and come from a mix of rental and salaried/self-employed income. They also both insist on between 1-2 years buy to let property experience, although not necessarily with HMO properties.
What mortgage rates are they offering?
With a 75% loan to value (LTV), the 2-year fixed rates start from 2.79% and 2.99%, with a 0.5% and 1% product fee respectively*.
If you’re looking for a longer, 5-year fix at 75% LTV, rates start from 3.19% and 3.39%, with a 2% and 1% product fee respectively*.
These rates are available to both individual and SPV limited company investors.
If you’re looking to remortgage an existing HMO property or are looking to invest in your first in Scotland, and would like more information about the types of mortgages now available to you, please do not hesitate to contact me, Luke Worrell, on 01732 471684 or email me firstname.lastname@example.org, and I will be happy to help.
*Rates as at 20/11/2019
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