Mortgages for Houses in Multiple Occupation (HMOs)
Written by Dalia Zaher
Updated at September 3rd, 2025
Table of Contents
Welcome to Advocate Finance, your trusted broker in securing HMO property mortgages!
As established commercial finance brokers, we understand the unique needs of property investors and business owners. We are here to provide tailored financial solutions that help you achieve your goals.
Whether you are looking for a HMO property mortgage, loan or refinance, we cover all aspects to ensure your success.
What are Houses in Multiple Occupation Properties?
Houses in Multiple Occupation (HMOs) are properties where two or more households share a house and its facilities such as a kitchen, bathroom and toilet.
What is a HMO Mortgage?
The HMO mortgages and lenders available depends on the size of the property (number of rooms), the licensing requirements and the planning permission (C4 residential or Sui generis).
On top of the type and size of HMO, the lenders and mortgage products available depends on the applicant’s experience as a landlord.
Key Features: HMO Mortgages
- Mortgage Range: HMO Mortgages from £100,000 to £50 million; subject to affordability and credit criteria
- Loan to Values: Loan to values up to 75% (100% with cross charges) and below 50% could be eligible for standard BTL mortgages, thereby benefitting from lower interest rates
- Mortgage Term: 1 to 30 years
- Payment Options: Interest Only / Capital Repayment
- Purpose: Purchase / Refinancing / Capital Raising (any purpose)
- Income Requirements: No minimum outside income / All income types
- Rooms: No max of number of rooms / units
- Tenancies: No max of number of tenancies
- All credit histories: High Net Worth to Credit Repair
- All applicant types: Individuals / Corporate (Ltd Co’s) / SSAS etc.
- All tenures: Freehold / Leasehold
- All residential tenants: Working, Students, LHA
- All residential tenancies: AST to Corporate Leases
- All business tenants: No restrictions on industry/sector
- All business tenancies: Fully repairing leases / Licences
- EPC-enhanced products: Available for energy-efficient properties
It is important to know that Councils may change HMO criteria
You will see in the definitions above that the main criteria are the number of tenants and the number of floors in the property.
It is important to know that although the above definitions are correct, each Council has the authority to change them. We have come across a council in the past, that requires HMO licenses for properties with as few as 3 tenants and only 2 floors.
Steps to Securing a HMO Mortgage
Begin with a consultation with one of our friendly mortgage brokers to discuss your investment goals, property details, and financial situation.
We will assess your needs and recommend suitable finance options.
We will submit a detailed loan application, including financial statements & property details etc. Our broker team will guide you through the documentation required by lenders.
A professional valuation will be conducted to determine the property's market value, including both residential and commercial elements. This is a critical step in the mortgage application process.
Once approved, solicitors will be instructed to carry out any legal formalities. This can be as quick as a week (if Title Insurance is used on refinance cases). Once this stage is completed funds will be released.
The Valuation Methodology is an Important Factor!
Using the services of a broker that understands how the property is valued is crucial as it affects the amount you can borrow. Most lenders will value the property as one tenure (freehold or leasehold), called a vacant possession valuation.
Our mortgage brokers will carefully consider the suitable lenders for your circumstances depending on how much you are looking to raise relative to the value of the property. But the property’s value can differ depending on the valuation methodology the lender instructs the valuer to use.
With respect to HMO properties, the biggest difference is whether the lender will use a vacant possession valuation or a commercial valuation.
| Vacant Possession Valuation | Commercial Valuation |
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This method is also known as a bricks & mortar valuation and is based on the current fair market value and local comparables, so is not always a favourite method when it comes to HMO properties. This is because the property will not be valued on a yield basis taking into account the rental income. |
This method is also known as an investment valuation. The ultimate goal and reason for proceeding with a commercial valuation on a HMO is because it can provide a higher value on the property. This is because the property will be valued on a yield basis, which takes into consideration what rental income the property is producing. |
Benefits of HMO Mortgages
Advantages of HMOs |
Disadvantages of HMOs |
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Overall Yield and Income Sources: HMO properties typically offer higher overall yields compared to standard buy-to-let investments. This is due to the dual income streams from multiple tenants. |
Property/Area Restrictions: Not all properties can be converted to a HMO due to restricted laws in some council areas – referred to as an Article 4. |
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Tenancy Types: Access to lenders who will lend when the HMO be let on one AST (assured short tenancy agreement), which is typical of student lets or multiple AST’s (we have access to lenders who have no maximum limit on the number of AST’s). |
Lenders: There are less lenders that offer financing for this type of property. |
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Property Types: All HMO licencing and planning classifications are considered. All HMO configurations are considered (multiple kitchens, kitchenettes & bathrooms). |
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Loan to Values: 100% HMO mortgages with an additional mortgage. 80% HMO mortgages as stand-alone mortgages. |
You can now gain access to the best solutions in the market
We are experts in arranging mortgages for Houses in Multiple Occupation that require a licence. We have a choice of 7 HMO mortgage lenders that are very active in providing HMO finance.
The choice of having 7 HMO mortgage lenders allows us to arrange HMO mortgages from 3 rooms up to an unlimited number of rooms. And at least 4 of these lenders are on restricted panels, therefore only selected brokers have access to them.
Why Choose Advocate Finance for a HMO Mortgages?
Expertise and Experience:
- At Advocate Finance, we specialise in providing brokering services in HMO property mortgages.
- HMOs are not to be confused with bedsits. Bedsit properties rented rooms in houses that share a bathroom with other tenants but have their own kitchen facilities – Our Advisers can help to explain this.
- Our team of experienced mortgage brokers have extensive knowledge of the unique challenges and opportunities associated with these types of properties. We understand the intricacies of the market and can provide expert guidance tailored to your specific needs.
- If speed is essential to the transaction, our advisers will prioritise your case to ensure deadlines are met.
Tailored Financial Solutions:
- We recognise that every client has unique financial goals and requirements. Our approach is highly personalised, ensuring that we offer tailored financial solutions that align with your investment strategy. Whether you are looking to purchase, refinance, or raise capital, we have the right mortgage product for you.
- With access to both the buy-to-let HMO mortgage lenders as well as the HMO commercial mortgage lenders, we can provide you with the widest range of products currently available in the market. We can assist if you are a first-time HMO landlord or a professional landlord.
Competitive Fee Structure
- We offer a FREE assessment with one of our mortgage brokers
- We have a no upfront fee policy
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Clear & transparent fee structure agreed upfront and in writing
- Want to read what our customers say? Read our testimonials & Google reviews
Comprehensive Range of Services:
- Advocate Finance offers a wide array of mortgage products and services. From bridging loans and refurbishment loans to long-term buy to let financing options, we cover all aspects of property finance. Our comprehensive service range means you can find all the financial solutions you need under one roof.
- Efficient and reliable – Known for our rapid response and dependable service, we ensure timely financial solutions. Our experienced team of mortgage brokers provide professional advice to help you navigate your buy to let mortgage options, ensuring you make well-informed decisions.