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What deposit is needed? (85% LTV HMO)

HMO Mortgages are available up to 85% LTV for Purchase or Remortgage. That's just a deposit of 15% of the property value.

85% LTV Buy to Let Mortgages are the highest LTV you can get as a property investor.  Landlords looking for leveraging prefer an 85% HMO Mortgage.

In 2017 only one Buy-to-Let lender KRBS offered 85% LTV Mortgages. In 2018 they joined by Kensington Mortgages and Vida Home Loans in 2019. 

What is an 85% LTV HMO Mortgage?

Loan to Value (LTV) is the mortgage amount percentage of the total value or purchase price. You can borrow up to 85% of the value of an HMO Property.

As an example on a property worth £100,000. With an 85% LTV HMO Mortgage you can borrow up to £85,000. That means just a deposit or equity of £15,000.

Mortgage Lenders consider 85% LTV as high risk giving us few options. The higher risk and fewer options are reflected in the mortgage rates and fees charged.

Whilst 85% LTV HMO Mortgages are available. The maximum loan is still constrained by affordability, mainly the rent achievable.

What are the benefits of 85% LTV HMO Mortgages?

HMO mortgages at 85 LTV are the highest property investors can obtain. Higher loan to value is not available for Buy-to-Let investors.

On purchases, you can buy a property with very little deposit. Helping you to expand your portfolio.

On remortgages, you can raise capital from your property. Enabling you to use funds elsewhere such as a renovation or expanding your portfolio.

Can you borrow up to 85% LTV of the Property Value?

The affordability of a Buy-to-Let Mortgage is based on the rent that is achievable.  It can be difficult for landlords to reach a rental stress test of 85%.

Completing the mortgage on a Five Year Fix and/or Limited Company may open up more options. Our mortgage advisers will be able to guide you in this.

For illustrative purposes only. On a mortgage of £170,000 with the Kensington Product, you would require £974 rent and £1090 from KRBS.

85% LTV Mortgage Criteria

Can you get 85% LTV HMO Mortgage in a limited company?

The products available are for Personal Name or in a Limited Company Buy-to-Let if purchasing in a Special Purpose Vehicle (SPV). Trading Companies differ.

Are HMO Mortgages regulated?

HMO Mortgages are not regulated by the Financial Conduct Authority (FCA). These are classed as commercial mortgages.

Should you buy a HMO in a Limited Company?

As the Government looks to take more of your rental income, landlords like you are looking at HMOs to increase rental yield. The question then is if you should buy the HMO in a Limited Company?

The primary reason for setting up an HMO Investment Company is to help manage your tax affairs. Your first stop should be your accountant.

Limited Company HMO Mortgages often have higher fees or rates. We work with you and your accountant to help them calculate the best. 

Though its not all about tax...

... read more on Should you buy a HMO in a Limited Company?

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