We are all interested in achieving financial independence, in securing a steady passive income that gives us the security we need to participate and invest in other pursuits we might have. And one of the ways we can invest in our financial future is with the help of HMO mortgages. But what do they mean, and why is it a good idea to use the services of a mortgage advisor when we want to enter this field? In the following paragraphs, we will try to explain these things precisely.
Who Are These Types of Financial Instruments for?
First, we should define what an HMO is. An HMO or a House in Multiple Occupation is defined as a property rented to more than three different households that share the facilities available on the property. That is the same recreational spaces, the same kitchen, and the same bathroom. HMOs are pretty popular with young people who do not want to rent a whole property themselves and look to save money by sharing practical accommodation with more than one person. This is different from a couple sharing the rent because the number of tenants must be more than three in an HMO.
This type of mortgage is primarily recommended for landlords who have a minimum of two years of experience in the field, and the credit conditions for obtaining this kind of loan are somewhat stricter than for others, requiring, for example, an initial deposit of at least 25% of the property value. But these types of HMO mortgages may be necessary if you want to get into the business, and HMOs can have some pretty obvious advantages for tenants and landlords.
Why Would I Be Interested in HMO Mortgages?
If you’re a homeowner looking to make a nice profit, then a mortgage like this may be what you’ve been looking for. Granted, it’s not the kind of investment that an inexperienced person should make, but in many cases, the advantages of an HMO outweigh the disadvantages. First of all, the fact that at least three tenants share the rent makes the total cost per rented property higher than if you were to rent to a single couple or family. In addition, the charge is lower for people who share the accommodation than if they had rented the property on their own. So, the prices are lower for tenants while the profit is higher for you.
Secondly, the increase in the number of people of all ages interested in house-sharing has also led to a steady rise in the number of individuals renting HMOs. It is unlikely for an HMO to be left unoccupied for a significant period. Even if this were to happen, the fact that a minimum of three households are required for occupancy means that at least some of the costs would be covered by renting to the rest of the tenants.
Are There Any Risks Associated with HMOs?
Yes, of course, and that’s why you should discuss any concerns you have with your mortgage advisor to find out if HMO mortgages are suitable for you. Lending conditions are a little stricter for people who want to take advantage of this type of loan, and the investment in the property may be higher if you’re going to rent on a slightly larger scale, with a license also being needed if you want to do this in England or Wales.
In addition, since at least three households share the property, it may be a little harder to find the culprits if damage occurs in an area of the house used by everyone, such as the kitchen or bathroom. Even this can ultimately be turned into a positive experience, as in some cases if the repair is deemed significant, the subsequent costs can be tax-deductible.
Why Would You Seek the Services of a Mortgage Advisor?
Because it is simply more convenient and can benefit you both financially and in terms of time lost. You may not know the legislation by heart, and you may not be up to date with the latest financial news and the latest paperwork required for a successful mortgage application. A mortgage advisor can take care of all the documents you need and make sure you know exactly what kind of financial instrument you are applying for while presenting you with all the advantages and disadvantages of the action in a concise fashion.
It is estimated that there are just under 500,000 HMOs in the UK, a figure which is also slightly down from previous years. Many of these properties have been purchased with the help of these specialized mortgages. Using the services of a mortgage advisor is likely to save you a great deal of legislative and financial hassle if you wish to join the ranks of landlords renting properties in this manner.
It’s All about Your Financial Success
It doesn’t matter what kind of mortgage you are interested in. We can apply for a simple buy-to-lent loan or for a mortgage with the Help to Buy program. Or we can discuss remortgages and apply to HMO mortgages. The point remains the same, in all circumstances, the wisest decision you can make is to use the services of a mortgage advisor. They will always have access to a host of financial schemes that you would not find by using the services of your local bank. They will help you save time and money, which you can invest in your business, and they will answer any questions you may have about the financial market and the opportunities that may open up for you.
You are a person who has worked hard for every dollar, and you know how important financial stability is to the well-being of a family. That’s why hiring the professional services of a company to guide you in economic pursuits can be a decision that will help you in the long run and increase the income available to your children.