What HMO Landlords in Peterborough Need To Know About Finance and Insurance

As the HMO (Houses in Multiple Occupation) market has grown rapidly over the last few years, we were not surprised to see new laws that HMO landlords and their properties need to comply with.  While this is great news for tenants that rent rooms in HMO properties in Peterborough, it does mean that landlords’ costs have gone up. This means it is now more important than ever, that as a Peterborough HMO landlord you need to choose your finance and insurance carefully.

In this blog post we have set out the finance and insurance changes that HMO landlords in Peterborough need to be aware of.

HMO Property Lenders Want To Know

All mortgage lenders have tightened their application criteria for HMO mortgages. There are several additional considerations that HMO mortgage providers will want to know so make sure you are aware of these as a HMO landlord in Peterborough, before applying for a HMO mortgage.

  • Lenders will want to know how many rooms are in the property. Usually lender will consider HMO properties up to 5 bedrooms, but anything over this may require commercial finance.
  • Lenders will want to know what sort of tenants that will be staying in your HMO property. For example, students or tenants on benefits will be a higher risk.
  • Lenders will want to complete a rental valuation. This will either be based on the rooms rent income or the rental income from a ‘standard’ let. The lender will choose.
  • The market for HMO finance is less competitive that other mortgage markets. Lenders will offer rates that tend to be higher than standard but to let mortgage products.

HMO Property Lenders Want To See 

When you apply for a mortgage as a HMO landlord in Peterborough you can expect to be asked to show the following information to the lender;

  • They will want proof that you are an experienced landlord.
  • They will require the address of the HMO property in Peterborough.
  • They will want to know the number of let-able rooms in the property. If a room is smaller than 4.64m2 it cannot be used as a bedroom, the same if a room ceiling height is less than 1.5m.
  • They will need to know who you intend to let the HMO property in Peterborough to. For example if it is just professionals, students only or those on benefits.
  • They will need to know how the HMO property in Peterborough will be managed; if you will do it yourself or use an agency. Please note: this is an area that AGT are experienced agents in.

These are just some of the things you can expect to be asked for proof of, however each HMO property lender will have different requirements. As experienced estate agents in Peterborough, we would highly recommend that you get your finance sorted before finding and purchasing the property. Otherwise you could have a property purchased, but you can’t let the property as you had hoped.