If you are wondering what HMO mortgages are and you want to look more into whether or you can get one or if you are interested in the process of getting a remortgage or why should you, this article will provide more information on these subjects. Getting a mortgage nowadays can turn out to be extremely beneficial on a long-term basis. If you are interested in getting the best deals from lenders it is advisable to contact a mortgage broker that will help you throughout the entire process until you get the desired deal.
An HMO is represented by a property rented to three or more individuals from varied households. These people have to be unrelated. So, if you are renting to a family or an unmarried couple, even to a pair of friends that met in school it does not count as an HMO. This House in Multiple Occupation has to be rented to a group of people, more than three, that are unrelated and have not met until living under this same roof. This type of property has some requirements that have to be met in order to be assessed as an HMO such as every tenant having to have their bedroom, and share a kitchen, bathroom, and living area.
Each of the tenants will have to sign their contracts, paying their rent and deposit separately from each other. HMO mortgages usually require a larger deposit than a residential mortgage. The deposit percentage is between 20% and 40$ depending on the lender. In some cases, depending on how many tenants you plan on renting your property to, the interest rates can be higher. There are two types of HMO: small, for three or four individuals, and large for more than five people. Technically, the small types are available to most buyers but in case you are planning on renting to more than five people, it is important to have an HMO license.
Get an HMO License
There are two things considered when applying for getting your license. It is important not to have had a criminal record and any complaints against you being a landlord. If you do not have such problems you can easily apply. You can check this status with your local authorities. You need to get your license before applying for HMO mortgages. After the application has been made you will also have to provide some information about the property you are renting. There are some conditions to be met such as:
· Each tenant has to have a bedroom. The bedrooms have a minimum size condition. More information will be provided to you by a specialized broker.
· Clear access to fire escape routes has to be provided.
· The property has to have emergency lighting.
· Smoke detectors have to be installed in every single room.
· The property's gas safety certificate has to be up-to-date.
· An electrician has to inspect on a regular basis all the electrical appliances on your property.
· The entire property has to be inspected regularly to make sure it meets the safety requirements.
· Your contact details have to be displayed somewhere on the rented property.
The Benefits of a Remortgage
While there are various reasons for which people want to remortgage , the most common and met one is the release of equity and getting a better deal with other lenders. This process can undergo easily whilst contacting a mortgage broker to help you get the best deal. In case your mortgage contract is soon about to end it is advisable to start looking into a remortgage up to 6 months before it ends. This can give you plenty of time to seek advice and set up a new contract before the current one ends. You can obtain a lower interest rate in order to save some money by decreasing the amount of monthly payments. You can change your variable rate to a fixed one. You can also turn equity into liquid cash for you to pay your debts or to make some house improvements.
In case you do not have enough equity in your house you can still explore the available options and get a better rate to save some money. During a lifetime you can get a remortgage several times without restrictions as long as you meet the requirements. Keep in mind that this process can also help you consolidate all your debts into one affordable monthly payment.
Why Contact a Mortgage Broker?
A mortgage broker can make the entire situation so much easier for you. Besides saving you time and extra fees, it can also find you the best deal and provide you with the necessary help throughout the process. They have better access to lenders' databases and they can directly search for the best option available for your request. Especially when it comes to HMO mortgages where the situation is a little bit more complicated because it also requires a license, a broker can make sure that your application is valid and will be accepted. They can assist you with advice on any situation you might encounter and help you solve the problems faster and easier.
Throughout years of experience, mortgage brokers have dealt with so many different situations while acquiring the necessary information to provide customer help no matter how hard their case is. Mortgage brokers represent one point of contact and they are usually very flexible with their working schedule, some may be available on all the 7 days of the week. They do all the work to get your application loan approved if you provide them with the necessary paperwork. Most of them do not charge their customers because their fee is guaranteed by the lenders. Furthermore, you do not have to accept every recommendation they make and you can advise them to look more into finding a better deal. Their interest is to make their customers happy and fulfilled with their services.