Buy to let investors & HMO landlords should take mortgage advice

Tuesday 19 September, 2023

Are you a commercial landlord and have buy to let investments or HMO investments in London?

Are concerned about recent interest rate rises?

If so, speak to your Thomas Oliver mortgage broker as soon as possible.

Some London buy to let investors are selling their rental properties as they are not making enough profit to justify keeping them.

However, we recommend you read this article as there are options for buy to let investors and HMO landlords to make your rental properties profitable.

Call our Tottenham based mortgage adviser, Katherine Mumford now for commercial mortgage advice

If your fixed rate commercial mortgage deal is due to end in the next six to nine months and you are deciding whether you re-fix or go on to your mortgage lenders standard variable rate get in touch with our mortgage advisors now on 01707 872000 as they can help you secure the right mortgage option for your financial circumstances.

Landlords can secure a re-mortgage deal six months before their current deal ends

Lenders allow you to secure a new mortgage deal with one of their own products up to six months before their current fixed rate deal ends. If interest rates keep increasing, it will potentially allow you to lock into a lower mortgage rate. By doing this if HMO investors or buy to let landlords can also potentially save money on re-mortgage costs such as surveys, legal fees, and broker fees. It is important to check the eligible period for application as applying too soon can result in an early repayment charge, and there are a few mortgage lenders that have a shorter period, for example 90 days. 

The benefits of applying for a remortgage six months before your current deal ends

Securing a new fixed rate six months ahead of time is a win, win situation if interest rates continue to increase as anticipated, as you lock in with the mortgage lender at today’s cheaper rate. If interest rates were to unexpectedly fall before the new product takes effect, you can cancel the product and re-apply at a more favourable mortgage rate.

Why HMO landlords and buy to let investors should take mortgage advice?

We recommend that you always seek mortgage advice from a Thomas Oliver mortgage adviser before renewing with your current lender, as there may be a better deal available with a new lender. Our Thomas Oliver mortgage brokers who work with commercial investors in London, Hertfordshire, Kent, and Essex can review hundreds of products from our panel of lenders  to find you the right mortgage deal available given your financial circumstances. A mortgage adviser will be able to provide mortgage advice after assessing your circumstances and objectives and then source the cheapest product for you from an appropriate mortgage lender.

HMO landlords don’t have to sell their property

Landlords in London could turn their losses into profits by turning to the HMO market to reduce the loss in revenue resulting from mortgage payments increasing at a rate vastly outstripping rental income.  It is becoming increasingly difficult for buy to let investors in London to continue to make a profit from their commercial property as mortgage rates continue to rise, so they could consider investing in HMO’s.

Whether you are an accidental landlord with a single let property or a large portfolio landlord, seeking early mortgage advice can save you the devastating decision of having to sell your property. Re-mortgaging to a new mortgage lender, especially if you own HMO properties can take a long time and if it’s not done early it can result in a landlord reverting onto a mortgage lenders standard variable rate. 

It is buy to let landlords on standard variable rates that are the main investors we are currently seeing who are being forced into selling their properties. With forward planning a struggling landlord can turn their rental losses into profits by converting to an HMO let, although there are initial start-up costs. If you want to know more about HMO investing, please call our Thomas Oliver mortgage brokers on 01707 872000.

Letting an HMO can achieve a greater income for landlords

Letting a property as an HMO achieves a greater yield. For example:

  • A 4-bedroom property in North London will rent to a family for £2,250 – £2,500.  
  • The same property let as a 4-bedroom HMO will generate £750/850 per room, or £3,000 – £3400 monthly income. 

Understandably this is a fast-growing market in the London rental sector, especially favoured by the larger portfolio landlords and we expect to see continued growth in the HMO sector.  

In Summary…

If you are a buy to let investor and considering selling your rental properties because of rising interest rates, call our mortgage brokers now to discuss HMO investing.


Approved by The Openwork Partnership on 13/09/2023

Thomas Oliver UK LLP is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.

Some Buy to Let mortgages and Commercial mortgages are not regulated by the Financial Conduct Authority.

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