HMO finance

Finance for the rooms, not just the house

HMO finance funds the way a House in Multiple Occupation actually works: several rooms, several rents, one property. We arrange HMO mortgages, bridging to buy and convert a house into an HMO, refurbishment finance and development finance, so you can buy, convert and hold rooms that earn well above a single let. We are a broker, not a lender.

How it works
One house, five rooms
Room 1£625/mo
Room 2£625/mo
Room 3£625/mo
Room 4£625/mo
Room 5£625/mo
Gross monthly rent
£3,125/mo
from a single converted HMO
Illustrative room rents to show how the rooms stack. Your own figures drive the calculator, and gross rent is before voids, bills and costs.
£100k to £10m
Facility size
To 70% / 75%
Typical LTV
From ~5.5%
HMO mortgage rate
125% to 145%
Rental stress (ICR)
Whole-of-market HMO lendersSmall, large and sui generis HMOsBuy, convert, refurbish or refinanceNo charge to enquire
How HMO finance works

From the deal to the rooms to the refinance

One journey funds an HMO from purchase, through conversion and licensing, to a trading property let room by room, and on to a refinance that releases cash for the next one.

01

Find the deal

Source a house to convert or a ready HMO to buy. Check the planning use class, whether an Article 4 direction applies, the licensing position and the room count, because all of that shapes what a lender will do.

02

Fund the purchase and works

Take an HMO mortgage on a property that already trades as an HMO, or a bridge to buy and convert, with the conversion works funded. We place the case with lenders whose criteria fit the property and your experience.

03

Let the rooms

Fill the rooms and the rent per room stacks into a gross yield that usually sits well above a comparable single let. That higher income is the reason HMO lending is assessed differently.

04

Refinance or hold

Once a converted HMO is trading and licensed, refinance a bridge onto a term HMO mortgage to release cash for the next project, or simply hold the property for the income.

When HMO finance helps

Four ways HMO landlords use us

Whether you are buying a ready HMO, converting a house, building a larger scheme or investing in your first HMO, there is finance that fits the property and your experience.

Buying a ready-made HMO

Purchasing a property that already trades as a licensed HMO? An HMO mortgage funds the purchase, sized on the rental income the rooms produce rather than a plain buy-to-let stress.

Converting a house to an HMO

Buying a standard house to turn into an HMO? A bridge funds the purchase and the conversion works, then you refinance onto a term HMO mortgage once it is trading and licensed.

Large and sui generis HMOs

Seven or more sharers takes a property into the sui generis use class and mandatory licensing. These larger HMOs are valued and lent against differently, and fewer lenders play, so specialist placement matters.

First-time HMO investors

New to HMOs? Some lenders want prior landlord experience and some accept newcomers at more conservative leverage. We know which lenders are open to first-time HMO investors.

Rates & costs

What HMO finance costs

HMO finance is priced against the property, the rental income and your experience. A licensed HMO that already trades has a clear income to lend against; a house you are buying to convert is assessed on the bridge plus the works and the exit. The figures below are indicative bands, not a quote.

Facility size
£100,000 to £10m (larger by referral)
HMO mortgage rate
Indicatively around 5.5% to 6.5% a year, depending on fix length and loan to value
Bridging / conversion rate
Around 0.75% to 1.1% per month while you buy, convert or refurbish
Loan to value
Up to around 70% to 75%, lower for first-time HMO investors or heavier conversions
Rental stress (ICR)
Typically 125% to 145% of the mortgage payment, depending on your tax band and the product
Term
2 to 5 year fixes on HMO mortgages; 1 to 24 months on bridging and conversion finance
Worked example (illustrative)
£400,000
HMO value
£300,000
Mortgage at 75% loan to value

On an HMO valued at £400,000, a mortgage at 75% loan to value funds £300,000, provided the rooms produce enough rent to pass the lender's rental stress test at 125% to 145% of the payment. The balance is your deposit or existing equity. These figures are an illustration to show how the sizing works, not a promise of any particular rate, value or loan.

The complete guide

HMO finance explained

HMO finance is the funding used to buy, convert, refurbish or refinance a House in Multiple Occupation. Because an HMO earns rent from several rooms rather than a single tenancy, it is assessed differently from a plain buy-to-let, and it usually produces a gross yield well above a comparable single let. That higher income, and the licensing and valuation that come with it, is why specialist HMO lending exists.

HMO mortgages versus ordinary buy-to-let

A standard buy-to-let mortgage is stressed against a single rent. An HMO mortgage is stressed against the combined room rents and often uses a specialist valuation. Fewer lenders offer them, some ask for prior landlord experience, and room sizes, amenities and the licensing position all matter. Pricing tends to sit a little above vanilla buy-to-let, indicatively from around 5.5% to 6.5% a year depending on the fix length and loan to value, with leverage typically up to around 70% to 75%.

Buying and converting a house into an HMO

If you are turning a standard house into an HMO, a bridge funds the purchase and the conversion works, often released in stages against the build. You then refinance onto a term HMO mortgage once the property is finished, trading and licensed, which repays the bridge and can release some of the increased value. Conversion and refurbishment bridging is indicatively priced around 0.75% to 1.1% per month, and the exit onto a term mortgage is planned from the start.

Licensing, use class and Article 4

An HMO with five or more occupants forming two or more households needs a mandatory licence, and many councils run additional or selective schemes that catch smaller ones. Use class matters too: converting a house to a small HMO is often permitted development, but that right is removed in an Article 4 area, where full planning is needed, and seven or more sharers takes a property into the sui generis class that always needs planning. Lenders want to see that the property is licensed or clearly licensable and that the planning position is sound.

Who we are

We arrange HMO finance for limited companies, professional landlords and investors across the UK, and we place each case with the specialist lenders whose criteria fit the property, the room count and your experience. We are a broker, not a lender. HMO lending for companies and investors is unregulated commercial lending outside the FCA's regulated-mortgage perimeter; where a case would be a regulated mortgage contract, for example a consumer buy-to-let, we refer it to an appropriately authorised firm. Nothing here is financial, legal, planning or tax advice.

FAQ

HMO finance FAQs

What is HMO finance?

HMO finance is the funding used to buy, convert, refurbish or refinance a House in Multiple Occupation, a property let room by room to sharers who are not one household. It covers term HMO mortgages for a property that already trades as an HMO, bridging to buy and convert a standard house into one, refurbishment finance, and development finance for larger schemes. We are a broker, not a lender, and we place each case with specialist lenders whose criteria fit the property and your experience.

How is an HMO mortgage different from a normal buy-to-let?

An HMO earns rent from several rooms rather than a single tenancy, so lenders assess it on that higher income and often on a specialist valuation. Fewer lenders offer HMO mortgages, they can ask for prior landlord experience, and licensing and room standards matter to them. The rental stress test still applies, typically at 125% to 145% of the mortgage payment depending on your tax band, but it is measured against the combined room rents. Pricing tends to sit a little above plain buy-to-let, indicatively from around 5.5% to 6.5% depending on the fix and loan to value.

Can you fund the purchase and the conversion works?

Yes. A bridge can fund both the purchase of a standard house and the works to convert it into an HMO, with the works often released in stages against the build. Once the HMO is finished, trading and licensed, you refinance onto a term HMO mortgage, which repays the bridge and can release some of the increased value. Conversion bridging is indicatively priced around 0.75% to 1.1% per month. The exit onto a term mortgage is planned from the start, because that is what makes the bridge work.

How much can I borrow against an HMO?

Two tests set the maximum, and the lower one binds. The first is loan to value, typically up to around 70% to 75%. The second is the rental stress test, where the room rents must cover the mortgage payment by 125% to 145% depending on your tax band and the product. On a strong income a small HMO can reach the loan to value ceiling, while a weaker income can cap the loan below it. First-time HMO investors and heavier conversions usually sit at more conservative leverage. These are indicative bands, not a quote.

Do I need an HMO licence to get finance?

Many HMOs need a licence, and any HMO with five or more occupants forming two or more households needs a mandatory licence, while some councils run additional or selective schemes that catch smaller ones. Lenders want to see that the property is licensed or is clearly licensable, because an unlicensable HMO is hard to let and to sell. On a conversion, lenders understand the licence follows completion, so the licensing plan forms part of the case. Licensing is a matter for your local authority, and nothing here is legal or planning advice.

Is HMO finance regulated by the FCA?

HMO mortgages and bridging arranged for limited companies, professional landlords and investors are unregulated commercial lending outside the FCA's regulated-mortgage perimeter. Some lending, for example a consumer buy-to-let or a loan to an individual secured on a property linked to their home, can be a regulated mortgage contract; where that is the case we refer it to an appropriately authorised firm. We are a broker, not a lender, and nothing here is financial, legal, planning or tax advice.

Ready when your deal is

Get indicative terms on your HMO

Tell us about the property, the room count and the licensing position, whether you are buying, converting or refinancing. We come back with indicative terms. There is no charge to enquire.

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