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Converting Properties to HMOs

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Converting Properties to HMOs

We are often approached by property investors asking about the different funding options converting a property into a HMO. These properties are proving to be increasingly popular high yielding investments for professional landlords. For those landlords considering converting properties into HMOs, there are various financing options that are available. We have provided a comparison of two options below.

Specialist HMO Mortgages

There is a specialist lender that can consider lending on a residential property where the intention is to convert it into a small HMO (6 or less bedrooms), providing there is no structural work or planning permission required.

  • Financed from Day 1 on a long-term specialist HMO mortgage.
  • Avoids bridging finance, therefore it is a cheaper form of financing.
  • You will be required to fund the works
  • The valuer would need to confirm that the project is viable, which from our experience has resulted in cases being both approved as well as declined therefore there is a risk involved.
  • Restricted to a simple HMO conversion up to 6 bedrooms where no planning is required.
  • The property must be in a lettable condition.
Bridging/Refurbishment Finance

Leading bridging lenders offer various products that vary from funding the conversion works, to guaranteeing a long-term exit onto competitive HMO mortgages.

  • 100% of the works can be funded (subject to lenders criteria)
  • Interest can be rolled up, meaning no monthly payments during the loan term
  • No Early Repayment Charges
  • Allows you to capital raise upon completion by refinancing onto a high LTV long term HMO mortgage
  • Short term finance offers more flexibility as the property does not need to be in a lettable condition
  • No limit on number of bedrooms, therefore the need for planning permission can be included in the project
  • Usually more expensive due to higher interest rates
  • Arrangement fees can be higher
  • Lender needs to be satisfied that the exit strategy and post works value is credible


If you are considering converting a property into a HMO or have recently carried out a conversion and need to refinance the property to move onto the next project, then please contact us today for a free consultation.

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