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SHOULD YOU APPLY FOR A HMO MORTGAGE?
More and more buyers are becoming interested in HMO mortgages these days, considering this type of funding for the commercial properties that they’d like to buy. Is a HMO Mortgage something that might benefit your business? Should you apply for a HMO Mortgage? Let’s talk a little about what HMO Mortgages are and how they work.
What is a HMO Mortgage?
HMO Mortgages are mortgages that provide long-term funding for commercial (and sometimes residential) properties that have been acquired via the buyer’s own cash, HMO bridge loans, or other types of funding. HMO Mortgages are available in both fixed-rate and variable rate options. They offer financing for anywhere form 5-25 years.
While they are somewhat similar to many other types of mortgages, HMO mortgages are specific to HMO properties. These are usually commercial spaces with various staff members but sometimes for residential properties in which three or more non-related members dwell.
If you’ve acquired an HMO property via your own funds or a bridge loan, your next step, once development and planning is underway, is to finalize that secured long term funding. You will need to contact a commercial property broker. Alternatively if you want to do so on your own behalf, contact a lender or firm that can provide you with an HMO mortgage.
How Does a HMO Mortgage Work?
Once you’ve applied for an HMO mortgage, you’ll generally be contacted reasonably quickly to go over your financial details, development plans, the terms of the loan agreement, and more. The lender will also go over both fixed rate and variable mortgages with you to help determine which one is the best option for your business.
After this process, inspections, valuations and other responsibilities on the end of the lender will be taken out. You will then need to wait to hear regarding your approval. The lender will contact you once everything has been approved and will advise you on the amount you’ve been approved for.
How Long Does it Take?
Once the final terms have been agreed upon, you and the lender will both sign the agreement and funding will be yours.
While HMO mortgages are generally completed in a reasonable time frame, they are definitely a slower process than say, a bridge loan, which gets funding very quickly. You should expect at least six to eight weeks for funding to be secured, during which time you may be asked to provide additional information.
The process of applying for an HMO mortgage is quite similar to most other types of mortgages. Because the property has already been acquired and in most cases, a plan for development already underway, HMO funding is often more customized than other types of mortgage. They are designed to work around your specifications and requirements.
If you’re interested in a commercial property and think an HMO mortgage is right for you, contact a commercial broker or reputable lender today. You’ll need to have initial funding taken care of in the form of a bridge loan or your own cash, but an HMO mortgage might just be your best bet to handle that long-term funding. Why not find out today?
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