Can I get an HMO mortgage on a 10-bed HMO without experience?

Yes, it is possible to get an HMO mortgage on a 10-bed HMO without experience, but it comes with certain conditions. Lenders typically offer higher lending rates for such high-risk investments. You can expect a Loan-to-Value (LTV) ratio of up to 75%.

Interest rates: due to the perceived risk of managing a large HMO without experience, mortgage lenders will often charge higher interest rates.

Yield-based valuation: for applicants with a personal income of over £50,000 per annum, the property may be valued based on its rental yield. This method focuses on the income potential of the HMO rather than just its market value.

Hybrid valuation: for those who do not meet the income criteria, lenders may use a hybrid valuation or a traditional bricks and mortar valuation. Hybrid valuations usually give recognition for the adaptability of the property as a HMO, but it is not a yield based valuations.

Bricks and mortar valuation: for those who do not meet the income criteria, lenders may also instruct a traditional bricks and mortar valuation. These consider the physical value of the property, comparably without a yield based approach and occasionally, it may also be on a 90 day basis, which refers to a property valuation method where the value is based on the price that can be realistically achieved within 90 days. This approach ensures a quick sale price, which can be lower than a standard market valuation but provides lenders with a more conservative and risk-averse assessment.

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