HMO Remortgage

We were approached by Ella, who owned a large house that she rented out. Ella had built up significant equity in the property over the years and now wanted to take some of this equity out.

She contacted her current lender and applied for a further advance, however, after valuation it was declined. They had deemed the property to be unsuitable for lending on as they didn’t offer lending on HMO properties.

As the property was near a station and a university; after renting it out to families for several years, she decided to convert the property into a HMO; as she would be able to achieve more rent by letting out the rooms individually. She had been with the same lender since she purchased the property and continued to pay her monthly payments.

Therefore, Ella was unaware that by changing the property to an HMO, she would be breaching the lender’s terms and conditions. Concerned that she had unwittingly done the wrong thing, she was eager to put it right.

We were able to assist the client by placing her application with a specialist lender, allowing her to take out the equity from the property with the correct type of mortgage in place.

Ella was extremely pleased with the result, as we were able to get more out of the property than she had thought possible- 75% of the value of the property.

Property value – £750,000

Rent received – £3500 PCM

Mortgage achieved – £562,500

Capital Raised – £365,756

Please note, that the case study is based on a real-life scenario, but names have been changed due to client confidentiality.

Published March 2021.

It is important to take professional advice before making any decision relating to your personal finances. Information within this case study is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for information purposes only.