The Mortgage Cafe

Mortgages for HMO Properties Requiring Refurbishment or Renovation

Financing Options

There are various lending options available for professional landlords looking to purchase, or remortgage any type of property that requires refurbishment, renovation, or full conversion, before being let. There are two basic funding scenarios:

Heavy Refurbishment

Improvement or conversion work requiring planning consent and/or building regulations approval and where a change of use may be required. Cost of works can exceed 15% of day1 value/purchase price. Lenders will allow further funds to be drawn on the mortgage, which can take the total borrowing up to 75% of the improved property value (or in some cases 90% of purchase price + cost of works) after the improvement works have been completed

Types of Property

Existing HMOs requiring a light refurbishment before being let. Properties requiring extensive renovation, or conversion to an HMO. Conversions to blocks of flats and renovations of blocks of flats.

Student accommodation, or properties designed for working professionals where assured shorthold tenancies will be put in place. Lenders will also consider properties to be leased to a local authority or housing association

  • Existing HMOs requiring a light refurbishment.
  • Properties requiring conversion to form an HMO
  • Conversions of large residential houses into flats
  • Conversions into studio apartments for professionals
  • Lenders will consider properties to be leased to local authority
  • Houses of Multiple Occupation (HMO)
  • Property in England, Scotland & Wales
  • Multiple Kitchens accepted
  • Blocks of flats
  • Student accommodation
  • Any number of letting rooms considered

Light Refurbishment Details

  • Full internal and external redecoration
  • Replacing Kitchens and bathrooms
  • Installing or renewing central heating systems
  • Upgrading electrics, or re-wiring throughout the building
  • Specialist work to rectify problems (timber treatment etc)

Heavy Refurbishment Details

  • Conversions including works requiring change of use
  • Extensions and loft conversions
  • Works requiring planning consent and building regulations
  • Re-configuration of internal layout
  • All structural work, including removal of load bearing walls

Applicant Profile

Applicants should have owned their main residence, or an investment (BTL or HMO) property for at least 12 months. Applicants should ideally have some previous experience of similar projects, and be able to show sufficient funds for the proposed work. A good level of personal income is essential and a reasonable credit history is required.

  • Homeowner or owned a BTL property for at least 12 months
  • UK passport or UK driving licence as ID
  • Evidence of deposit funds and refurbishment costs
  • Applicants can be Employed, Self Employed
  • Previous experience of similar developments, or own at least two investment properties

Situational Profile

For applicants looking to buy, or remortgage any residential or commercial property to be converted for use as an HMO, or for an existing HMO property requiring refurbishment. All property types considered (see below). The Light Refurbishment and Heavy Refurbishment categories allow the following scope of works:

General Lending Criteria for Professional Landlords

Mortgages are available for purchase, or remortgage up to 75% of purchase price, or property value. Options with no early repayment charge (ERC) subject to 1 months interest.

  • Purchases or Remortgage
  • Interest only or capital + interest repayment
  • Properties located in England, Wales, Scotland accepted
  • Up to 75% LTV or 90% of purchase price + cost of works
  • Options for No Early Repayment Charge (ERC)

Light Refurbishment

Improvement work to be non-structural in nature and not requiring planning consent or building regulations approval. No change to the overall use/nature of the property. Limit for cost of works to be no more than 15% of day 1 value/purchase price of the property.

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