Mortgages for HMO Properties Requiring Refurbishment or Renovation
To buy an HMO property that needs refurbishing before being let
To buy a property to be converted into an HMO
To re-finance an existing HMO property for a refurbishment programme
To re-finance commercial property for conversion to an HMO
here are various lending options available for professional landlords looking to purchase, or remortgage any type of property that requires refurbishment, renovation, or full conversion, before being let. There are two basic funding scenarios:
Improvement work to be non-structural in nature and not requiring planning consent or building regulations approval. No change to the overall use/nature of the property. Limit for cost of works to be no more than 15% of day 1 value/purchase price of the property.
Improvement or conversion work requiring planning consent and/or building regulations approval and where a change of use may be required. Cost of works can exceed 15% of day1 value/purchase price.
Lenders will allow further funds to be drawn on the mortgage, which can take the total borrowing up to 75% of the improved property value (or in some cases 90% of purchase price + cost of works) after the improvement works have been completed
For applicants looking to buy, or remortgage any residential or commercial property to be converted for use as an HMO, or for an existing HMO property requiring refurbishment. All property types considered (see below).
The Light Refurbishment and Heavy Refurbishment categories allow the following scope of works:
Light Refurbishment details
- Full internal and external redecoration
- Replacing Kitchens and bathrooms
- Installing or renewing central heating systems
- Upgrading electrics, or full re-wiring throughout the building
- Specialist work to rectify problems (timber treatment, damp proofing, drains etc)
- Conversions including works requiring change of use
- Extensions and loft conversions
- Works requiring planning consent and building regulations
- Re-configuration of internal layout
- All structural work, including removal of load bearing walls
Applicants should have owned their main residence, or an investment (BTL or HMO) property for at least 12 months. Applicants should ideally have some previous experience of similar projects, and be able to show sufficient funds for the proposed work. A good level of personal income is essential and a reasonable credit history is required.
- Homeowner or owned a Buy to Let property for at least 12 months
- UK passport or UK driving licence as ID
- Evidence of deposit funds and refurbishment costs (bank statement)
- Applicants can be Employed, Self Employed
- Previous experience of similar developments, or own at least two investment properties
Types of property
Existing HMOs requiring a light refurbishment before being let. Properties requiring extensive renovation, or conversion to an HMO. Conversions to blocks of flats and renovations of blocks of flats
Student accommodation, or properties designed for working professionals where assured shorthold tenancies will be put in place. Lenders will also consider properties to be leased to a local authority or housing association
- Existing HMOs requiring a light refurbishment before being let.
- Properties requiring conversion to form an HMO eg. former guesthouses and hotels.
- Conversions of large residential houses into flats and renovations of blocks of flats
- Conversions into studio apartments for working professionals
- Lenders will consider properties to be leased to a local authority or housing association.
- Houses of Multiple Occupation (HMO)
- Property in England, Scotland & Wales
- Multiple Kitchens accepted
- Blocks of flats
- Student accommodation
- Any number of letting rooms considered
Tenancy types accepted for the finished property
- Working professionals
- Corporate lease arrangements (such as let to local authority)
General Lending Criteria for Professional Landlords
Mortgages are available for purchase, or remortgage up to 75% of purchase price, or property value. Options with no early repayment charge (ERC) subject to 1 months interest.
- Purchases or Remortgage
- Interest only or capital + interest repayment
- Properties located in England, Wales, Scotland accepted
- Up to 75% LTV or 90% of purchase price + cost of works
- Options for No Early Repayment Charge (ERC)
HMO-1LR – For habitable HMOs requiring light refurbishment only. Up to 65% LTV initially. rising to 75% of improved value when finished. Any size of property.
RRM-1 – Initial short-term loan up to 75% of purchase price, followed by a guaranteed switch to HMO mortgage with maximum increased loan up to 90% of purchase price, plus cost of works, or 75% LTV.
RRM-3ST4 – For light refurbishment projects. Up to 70% LTV rising to 75% of improved value when finished. Any size of property.
RRM-3ST4L – as above, but for mortgages over £750,000
RRM-3ST6 – For heavy refurbishment projects. Up to 70% LTV rising to 75% of improved value when finished. Any size of property
RRM-3ST6L – as above, but for mortgages over £750,000
RRM-3R2 – For properties requiring minor decorative work. Up to 75% LTV rising to 75% of improved value when finished. Any size of property.
HMO-17LR – Any refurbishment work allowed. Up to 75% LTV rising to 75% of improved market value when finished. Student tenants only (no maximum number of students). Not available for properties requiring an HMO licence.
Residential Multi-let Investment
Contact us on 0117 223250 to discuss your requirements with a Buy To Let mortgage specialist
Mortgage Application Assistance
We can even complete the mortgage application on your behalf. The mortgage adviser can help you complete the application over the phone or email.
Products for property investors buying property to refurbish