Drummonds Finance Group
HMO
Mortgage Broker
Need a mortgage for a house in multiple occupation? HMO lending has its own rules on licensing, room numbers, experience and valuation, and the right lender can make a big difference to how much you can borrow. As a whole-of-market HMO mortgage broker, we arrange HMO purchases and remortgages for first-time and experienced landlords, in personal names and limited companies, across the UK.
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✓ Specialist HMO Lenders | ✓ Personal & Limited Company | ✓ Whole-of-Market Advice
Why Choose Drummonds for HMO Mortgages?
✅Specialist HMO lenders
Access to high street and specialist lenders that understand small HMOs, large licensed HMOs and multi-let conversions.
✅First-time HMO landlords
Some lenders accept landlords with no HMO experience. We know which ones, and what they will ask for.
✅HMO valuation know-how
We find lenders that value HMOs on rental income where it suits your property, which can increase what you can borrow.
✅Licensing and conversions
Help with licensing, Article 4 areas and refinancing after converting a single let into an HMO.
What is an HMO mortgage?
An HMO mortgage is a buy-to-let mortgage for a house in multiple occupation: a property let to three or more tenants who form more than one household and share facilities such as a kitchen or bathroom. Many standard buy-to-let lenders won't lend on these properties, so you need a lender with specific HMO criteria. The main types are:
Small HMOs: three or four tenants, which don't need a mandatory licence, although some councils license them under additional licensing schemes
Large HMOs: five or more tenants from two or more households, which need a mandatory HMO licence from the council
Multi-unit freehold blocks: several self-contained flats on one title, which lenders usually assess differently from HMOs
Converted HMOs: family houses converted to let by the room, which may need planning permission first
Our buy-to-let mortgages page covers standard lets if your property won't be an HMO.
What do lenders look for on an HMO mortgage?
Every HMO lender has its own rules, and they change often. Most look closely at:
Your experience: some lenders want a track record as a landlord, while others accept first-time HMO landlords
Size: some lenders limit the number of bedrooms or tenants, while specialist lenders accept larger HMOs
Licensing: a valid HMO licence, or proof you have applied, where one is needed
Rental cover: the rent must cover the mortgage payments at the lender's stressed rate, usually by 125% or more
Property standard: fire safety, room sizes and shared facilities that meet council requirements
Deposit: usually at least 25% of the value
Applying to the wrong lender can mean a wasted valuation fee and a decline, so we check your property, experience and figures against each lender before you apply.
Why use an HMO mortgage broker?
HMO lending is one of the most specialist areas of buy-to-let. Criteria on room numbers, tenant types, experience and licensing vary from lender to lender, and many of the lenders that suit HMOs only work through brokers.
As a whole-of-market broker, we:
Check your property against each lender's HMO criteria before you apply
Find lenders that accept first-time HMO landlords if you need one
Compare personal name and limited company options
Look for lenders that value on rental income where that helps
Manage the valuation, underwriting and legal work through to completion
If you have four or more mortgaged buy-to-lets, our portfolio landlord mortgages page explains how lenders assess your wider portfolio.
How are HMOs valued for a mortgage?
Lenders value HMOs in one of two ways, and the difference can change how much you can borrow:
Bricks and mortar valuation: the property is valued like a normal house, based on comparable sales nearby
Investment valuation: the property is valued on the income it produces, sometimes called a commercial valuation, which is more common for larger HMOs
An investment valuation can be well above the bricks and mortar value when an HMO produces strong rent, which can mean a bigger loan or more equity to release on a remortgage. Not every lender offers it, and it depends on the property, its licensing and its letting history.
You can check the rent against lender stress tests with our buy-to-let calculator.
Do you need an HMO licence?
In England, any HMO let to five or more people from two or more households needs a mandatory licence from the local council. Many councils also run additional licensing schemes for smaller HMOs, and some run selective licensing for all private rentals in certain areas.
Mandatory licensing: five or more tenants from two or more households sharing facilities
Additional licensing: council schemes that can cover HMOs with three or four tenants
Minimum room sizes: 6.51 square metres for a room slept in by one adult and 10.22 square metres for two adults
Article 4 directions: in some areas, converting a family house into even a small HMO needs planning permission
Check with your council before you buy, and see the GOV.UK guide to HMO licences. Lenders will usually want to see the licence, or proof you have applied, before they lend.
Get an agreement in principle today.
Before you offer on an HMO, it is worth knowing which lenders will accept the property and how much they will lend. We check the room numbers, licensing and rent against each lender's criteria and arrange an agreement in principle, so you can offer with confidence. In straightforward cases we can often do this the same day.
Specialist Mortgages
Not every mortgage fits a lender's computer model. Much of our work at Drummonds Finance Group is with clients who have been turned down elsewhere or told their case is too complicated. We work with clients across the UK by phone and video, and we know which lenders will look at each situation properly.
Can first-time landlords get an HMO mortgage?
Yes. A growing number of lenders accept first-time landlords and landlords with no HMO experience, although the choice is smaller and some ask for a larger deposit, a minimum personal income or a letting agent to manage the property. Owning your own home usually widens your options.
We will show you which lenders accept your situation and what they need from you. Our guide to getting a buy-to-let as a first-time buyer explains the wider picture.
HMO mortgages for limited companies
Many HMO landlords buy through a limited company, usually a special purpose vehicle set up only to hold property. Lenders often use lower rental cover for companies than for higher-rate taxpayers borrowing personally, which can increase how much you can borrow. Directors and main shareholders are normally asked for personal guarantees.
Our limited company buy-to-let page explains company structures and the lenders that accept them. We don't give tax advice, so speak to your accountant before deciding how to hold an HMO.
Can you convert a buy-to-let into an HMO?
Turning a single let into an HMO can increase the rent, but your lender needs to know. If you have a standard buy-to-let mortgage, you will usually need your lender's consent or a remortgage to an HMO lender before you let by the room.
Many landlords buy with cash or short-term finance, carry out the conversion and get the licence, then refinance onto an HMO mortgage once the property is let. Check planning first, especially in Article 4 areas.
Large HMOs and sui generis properties
HMOs with seven or more occupants usually fall outside the small HMO planning class and need planning permission as a sui generis use. Fewer lenders cover large HMOs, and those that do look closely at your experience, how the property is managed and the valuation method.
We work with lenders that accept larger HMOs and multi-let properties, including some that value on rental income. Our commercial mortgages page covers mixed-use and semi-commercial property.
Student HMO mortgages
Student lets are one of the most common types of HMO. Some lenders are happy with student tenants on joint tenancies, while others prefer working professionals or individual room lets, and some want parents to act as guarantors.
Our student let mortgages page explains the lender rules, and our guide to Oxford HMO investments looks at one of the strongest student and professional rental markets in the country.
What documents do you need for an HMO mortgage?
Proof of identity and address
Income evidence, such as payslips, tax calculations or company accounts
The HMO licence, or proof you have applied, where one is needed
Tenancy agreements and a rent schedule for each room
A property schedule if you own other buy-to-lets
Details of your experience as a landlord
Planning permission or a certificate of lawful use where relevant
Details of any refurbishment or conversion work
How much deposit do you need for an HMO?
Most HMO lenders want a deposit of at least 25%, and a small number go higher for the right landlord and property. How much you can borrow also depends on rental cover: the rent from all the rooms must cover the mortgage payments at the lender's stressed rate.
HMO rents are usually higher than a single let on the same property, which helps rental cover, so the valuation and your deposit often decide how much you can borrow.
HMO remortgages and releasing equity
If your fixed rate is ending, we compare a product transfer with your existing lender against a remortgage to a new one. We arrange product transfers with no broker fee.
Remortgaging can also release equity for your next purchase, especially once your HMO is licensed, fully let or eligible for an investment valuation. See our remortgage and product transfer pages.
HMO mortgage rates and fees
HMO mortgage rates are usually a little higher than standard buy-to-let rates, and arrangement fees are often higher too, sometimes set as a percentage of the loan. The lowest headline rate isn't always the best deal, because fees, the lender's stressed rate and its valuation method all change the overall cost and how much you can borrow. We compare the full picture for you.
Can you get an HMO mortgage with bad credit?
Some specialist lenders will consider HMO mortgages for landlords with missed payments, defaults or CCJs, depending on how recent and how large they are. Our adverse credit mortgages page explains how lenders view each type of credit problem.
Protecting your HMO income
An HMO carries a larger mortgage and more tenants than a typical buy-to-let, so it is worth thinking about how the payments would be met if you couldn't work. Alongside your mortgage, we can arrange life insurance, critical illness cover and income protection.
HMO mortgages across the UK
We arrange HMO mortgages for landlords across the UK by phone and video, with lenders covering England, Wales and Scotland. Licensing and planning rules differ between councils and between the UK nations, so we check the rules that apply to your property before you apply.
If you invest in Oxfordshire, our Oxford, Bicester and Banbury pages cover the local rental markets.
How does the Renters' Rights Act affect HMO landlords?
The Renters' Rights Act 2025 brought major changes for landlords in England, with the main reforms starting on 1 May 2026. Section 21 no-fault evictions have ended and most tenancies are now periodic, which matters for HMOs where rooms are let individually. Lenders are adapting their criteria, so we check how each one treats your tenancy set-up.
How long does an HMO mortgage take?
An HMO purchase usually takes a little longer than a standard buy-to-let, because the valuation is more detailed and lenders check licensing, planning and room sizes. Having your licence details, tenancy plans and documents ready helps, and we keep the lender, valuer and solicitor moving so your purchase isn't held up.
How we work with HMO landlords
We talk through your property and plans by phone or video, at a time that suits you.
We check the property, licensing and rent against each lender's HMO criteria.
We compare specialist and high street lenders, and personal and limited company options.
We submit your application and manage the valuation and underwriting through to completion.
We contact you before your rate ends, so your HMO never drifts onto a higher rate.
Author
Written by Liam Drummond CII (MP), owner and named mortgage broker at Drummonds Finance Group. Member of the Personal Finance Society, the Society of Mortgage Professionals and the Chartered Insurance Institute.
Liam arranges HMO, buy-to-let and portfolio mortgages for landlords across the UK, from first-time HMO landlords to large multi-let properties. See also our buy-to-let, student let and portfolio landlord pages.
Drummonds Finance Group is a trading style of Liam Drummond, who is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority. FCA number: 945428.
On this page we have explained what an HMO mortgage is, what lenders look for, why a broker helps and how HMOs are valued. We have covered licensing, first-time HMO landlords, limited companies, conversions, large HMOs, student lets, documents, deposits, remortgaging, rates and fees, bad credit, protecting your income, the Renters' Rights Act and how we work with HMO landlords.