Week 91: HMO Mortgage Application 

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Hope everyone is well, I for one am super stressed. I have a valuation booked for the 15th of this month which is just a little short of three weeks hence my blog is so late (Wednesday evening) and I usually write the series over the weekend. 

Part 1/Mortgage

It is my first ever mortgage application and so much financial terminology. The application itself was not too bad and fairly straight forward as majority of it is done during the fact find stage (basically the application). You have to appoint a broker, in my case it’s a lovely gentleman named Daniel Kilminister, introduced to me by our project manager, the only thing he did right in all honesty. I had to submit an awful lot of paperwork and pass a credit reference check. My broker who has access to the ‘whole of market’ meaning he’s not bound to any one single lender but many, will run some searches to get me the best offers. He works on our behalf and not the lender. This guy was a complete darling, had so much patience and explained things to me several times exactly the kind of guy a gal needs on her first investment. Then the offer which after careful analysis will need to be accepted. All these decisions by the way have to be done while you're running around frantically trying to complete the project.

Tip: Try your best to be alert when reading these documents as you can miss the finer details and it is so true when they say ‘the devil is in the detail.’ I crammed mine at 5 in the morning before heading off to work. Not ideal but the only time I had.

Things to consider or compare:

  • Term of mortgage 20, 25 or 30 years

  • Arrangement fee, usually 1-2% of the mortgage

  • Broker fee (not that much)

  • Valuation fee (#f•••g hate these)

  • Two year fix or Five years

  • Interest only or including capital

  • Interest rate (ours was 3.9%)

  • Monthly repayments

  • Early redemption charges/penalties

  • Ability to pay lump sums

List of actions or submissions:

  • Complete Fact Find Sheet

  • Credit Referencing 

  • ID: Passport/DVLA 

  • 3 x Bank statements

  • 3 x Payslips (yikes) 

  • BTL Mortgage Form 

  • Signed declarations 

Part 2/HMO

Otherwise known as House of Multiple Occupation. Luckily I didn’t require a licence as you would normally as mine is only a 4 bed and not a 5. If it had five or more people in there then I would need a licence which I can obtain from East Lindsey District Council. I believe it was around £660 for 3 years so a lot cheaper when compared to my hometown Birmingham prices. Not to mention the many hoops you would have to jump through to get one of these. I will still need to make sure I fulfill certain obligations like minimum room sizes and fire safety etc to make sure the house is safe and ready for this kind of dwelling. With this comes more decisions as to whether or not to self-manage or appoint an agency in which case I will need to talk you through this via another blog. Rent charges and current rates. Types of tenants, students or professionals? singles or couples? smokers or non-smokers? And pets or no pets? These are just some questions you will need to go through to set the correct pricing. Things I had to do to make sure it fits the criteria of a HMO and not a Single Let.

  • Bedrooms no smaller than 6.5 m2

  • A meter of work space per person/kitchen

  • Adequate communal space 

  • Fire doors/Fire alarms

  • Safety certificates for appliances 

  • Fully furnished with all mod cons

My main priority is to complete the house before the dreaded visit. Once the valuation has taken place then the pressure eases a touch. Well I hope so... wish me luck.

The Opulent Team Opulent Property Investors Comment