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Landlord case study - complex HMO

Case outline:

Our client had owned one buy-to-let property for 12 months and was now looking to purchase an HMO to maximise his rental income. His income was around £16,000 and he currently lived with his parents.

The property consisted of 5 bedrooms each with a kitchenette and en-suite facilities, a shared kitchen and large bathroom but no shared living space. It was a large, 2 storey, leasehold flat above a parade of shops on a small high street.

No takeaways or pubs immediately next to the property but present at the end of the high street. The client planned to let the property to students.

Property value: £250,000
Loan required: £187,500
Rental income: £1,500 pcm (£300 per month, per room)
Loan-to-value: 75%

Solution provided:

Many lenders were put off by the commercial elements and lack of shared communal space. The property was deemed unsuitable for family letting.

The case was discussed with several lenders and proceeded with one who later declined the case following the valuation. We promptly placed it with an alternative lender using the existing case details and obtained a mortgage offer.

The process from mortgage application to offer only took around 5 weeks despite the initial declined valuation.

Product chosen:

3.39% 2 year fixed with a 1.5% lender fee - HMO range.

Monthly payment: £537 pcm (with lender fee added to the loan)

If you would like to discuss options for limited company buy-to-let mortgages please phone our team of buy-to-let experts on 029 2069 1010.

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This website aims to give you general information. It is not advice, nor can it take account of your own particular circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage. The Financial Conduct Authority does not regulate some forms of mortgages.

Buy-to-Let Direct Limited: registered in England no. 06664758 : Regus House, Malthouse Avenue, Cardiff Gate Business Park, Mid Glamorgan, Cardiff, CF23 8RU. Buy-to-Let Direct is an Appointed Representative of The Business Mortgage Company Services Ltd, which is authorised and regulated by the Financial Conduct Authority (No. 302764) to transact regulated mortgages and registered as a Consumer buy to let arranger. The FCA does not regulate some investment mortgage contracts.