Flexible HMO mortgages designed for growth-focused landlords

What is an HMO?

A House of Multiple Occupation (HMO) is a property rented by multiple tenants who are not from the same household and who share facilities such as kitchens or bathrooms. Redwood Bank defines HMOs as follows:

• Small HMOs: up to 6 letting rooms

• Large HMOs: 7 or more rooms

HMOs meet high demand from students, young professionals, contractors and key workers, making them a valuable component of the UK rental market. Our mortgages are built to reflect the regulatory, licensing and operational requirements involved in operating these properties.

Why choose Redwood Bank for your HMO mortgage?

We know the realities of HMO investment and provide lending that works for experienced landlords who need flexibility, certainty and a lender who understands their business model.

What you can expect

• Competitive pricing for small and large HMOs

• Competitive affordability assessments

• Rental coverage:

• 125% of monthly repayments for small HMOs

• 145% of monthly repayments for large HMOs

• Support for complex structures and multi-entity ownership

• No limit on the number of properties in a single application

• Dual representation available to speed up completion

• A fast, clear Decision in Principle

• A dedicated relationship manager from enquiry to completion

Who we lend to

Landlord profile

Our HMO mortgages are designed for UK-based entities or individuals, partnerships, limited companies, LLPs, Trusts and SPVs, as well as UK expats. Landlords should be able to demonstrate:

• At least 12 months’ experience managing HMOs or rental properties

• Evidence of sustainable rental income

• Compliance with planning and licensing requirements

• Maximum borrower age 85 at end of loan term (although can be extended if a succession plan is in place)

Property criteria

We consider a wide range of HMO property types, including:

• Small and large HMOs

• Properties with complex layouts

• Redeveloped or newly converted HMOs

• Properties held in individual or company structures, including SPVs

• Mixeduse assets where appropriate

• Well-maintained properties in strong rental markets

Where appropriate, investment valuations may be used, including for suitable large HMOs, small HMOs that have undergone adaptations to meet HMO legislation and small HMOs located within an Article 4 area with C4 planning permission.

HMO mortgage product overview

Loan size

• Mortgages from £250,000 to £10 million

• Maximum loan per single asset:

• Up to £6.5m at ≤65% LTV

• Up to £4m for LTVs above 65%

Loan to Value (LTV)

• Up to 76.5% including fee

• LTV assessed against valuation, not purchase price

Rates and terms

• Rates from 4.84%

• Fixed terms from 2, 3 and 5 years

• Capital and interest or interest only

• Interest only available up to 30 years for residential and semi-commercial properties; up to 20 years for commercial

• Higher fee/lower rate structures available to support affordability

Green Reward Cashback

• Up to 0.50% cashback on EPC A–C properties

Find out more about Green Cashback reward.

Additional lending flexibility

We can also consider:

• UK expats up to 60%

• SIPP and Trust borrowers

• Corporate lets and nonAST arrangements

• Serviced accommodation

• Grade II listed buildings

• New-build properties

• Borrowers aged over 85 (subject to joint borrower structures)

• 10% overpayment allowance

• No facility fee

• Personal Guarantees capped at 25% (except where corporate guarantees are more appropriate)

Fast Decision in Principle and smooth completion

Our improved Decision in Principle process provides clarity early in the journey and helps you move forward quickly. Dual rep solicitors are available to streamline the legal process and reduce completion timelines.