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Commercial Finance for HMOs: What You Need to Know

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If you’re looking for commercial finance solutions for your HMO property in the UK, you’ve come to the right place. We specialise in sourcing high-quality commercial finance for HMOs, with market-leading rates of up to 75% Loan to Value. Whether you’re looking for a finance solution for a licensed or unlicensed HMO, we can help secure the best investment property loans, including interest-only HMO commercial mortgages.

In addition to HMO finance, we offer a wide range of finance solutions for both residential and commercial properties, including retail outlets, offices, warehouses, factories, nursing and care homes, gyms, investment properties, development land, and buy-to-let properties. We also offer large business loans, working capital loans, unsecured and secured business loans, e-commerce financing, revolving credit facilities, merchant cash advances, asset finance, invoice finance, management buyout finance, and business acquisition finance.

Key Takeaways

  • We specialise in sourcing commercial finance solutions for HMOs in the UK, with market-leading rates.
  • They offer a wide range of finance solutions for both residential and commercial properties, including retail outlets, offices, warehouses, factories, nursing and care homes, gyms, investment properties, development land, and buy-to-let properties.
  • In addition to HMO finance, we offer large business loans, working capital loans, unsecured and secured business loans, e-commerce financing, revolving credit facilities, merchant cash advances, asset finance, invoice finance, management buyout finance, and business acquisition finance.

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Commercial Finance For HMOs

What Is An HMO

An HMO, or house in multiple occupations, is a type of property that is rented out to at least three people who are not from the same household but share communal areas such as a kitchen and a bathroom. Cohabiting couples, step-parents and step-children, and relatives or half-relatives are considered as the same household.

HMOs are popular among investors and landlords as they offer higher rental yields compared to standard buy-to-let properties. They are also a preferred model for many landlords and investors as they produce a higher ROI through rental yields and monthly cash flow.

Do I Need An HMO Licence?

If you are planning to If you rent a property to five or more individuals who don’t belong to the same family, it’s designated as a ‘large HMO’. In this case, you’ll need a license. You can obtain this HMO license from the local council of the property’s location.

Commercial Finance For Non Licensed HMOs

Obtaining commercial financing for an HMO without a licensing requirement is generally more straightforward than for one that mandates a license. Some conventional lenders provide commercial financing for such HMOs. An HMO that needs one. There are some mainstream lenders that offer commercial finance for HMOs,

Traditional lenders often have strict application processes that can be time-consuming.

For commercial financing related to your HMO property, it’s recommended to consult a professional broker to secure the best deal tailored to your situation.

Commercial Finance For Licensed HMOs

Typically, commercial finance for licensed HMOs is more expensive and harder to obtain, as not all lenders are prepared to provide finance in this area. Lenders often prefer to provide commercial finance for HMOs to those with a demonstrated history of successful HMO projects. Without this experience, securing the necessary financing might be challenging. While many lenders prioritize HMO experience, there are a few who offer commercial finance for licensed HMOs, typically collaborating with intermediaries like finance brokers.

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Frequently Asked Questions

What are the best commercial finance options for financing an HMO property?

When it comes to financing an HMO property, there are several commercial finance options available. The best option for you will depend on your individual circumstances, such as the size of the property and your credit score. Some of the most popular commercial finance options for HMO properties include commercial mortgages, bridging loans, and specialist HMO finance. It is important to speak to a specialist commercial finance broker who can advise you on the best option for your specific situation.

How can you calculate the commercial finance rates for an HMO property?

The commercial finance rates for an HMO property will depend on a number of factors, including the size of the property, the location, and your credit score. To get an accurate idea of the commercial finance rates for your HMO property, you should speak to a specialist commercial finance broker who can provide you with a personalised quote. They will take into account all of the relevant factors and provide you with a competitive rate.

What are the current HMO mortgage rates?

The current HMO mortgage rates will vary depending on the lender and the specific terms of the mortgage. It is important to shop around and compare rates from different lenders to ensure you are getting the best deal. A specialist commercial finance broker can help you to find the best HMO mortgage rates for your specific situation.

Is it possible to get a business loan for an HMO property?

Yes, it is possible to get a business loan for an HMO property. However, the specific terms and conditions of the loan will depend on the lender and your individual circumstances. It is important to speak to a specialist commercial finance broker who can advise you on the best business loan options for your HMO property.

Can an HMO property be considered as a commercial property for financing purposes?

Yes, an HMO property can be considered as a commercial property for financing purposes. This is because it is a property that is being used for business purposes, rather than as a residential property. As such, it may be eligible for commercial finance options such as commercial mortgages and bridging loans.

What are the requirements for obtaining funding for an HMO property?

The requirements for obtaining funding for an HMO property will depend on the specific type of finance you are applying for. However, in general, you will need to provide information about the property, such as its size and location, as well as information about your credit score and financial history. It is important to speak to a specialist commercial finance broker who can advise you on the specific requirements for the type of finance you are applying for.

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