Remortgaging 6-bed HMO for existing client

Remortgaging 6-bed HMO for existing client

Article by Romit Patel Associate Director - Specialist

What was the situation?

I had previously arranged a bridging loan for my existing client who was now at the end of their renovation. They wanted to remortgage to a traditional lender, to repay the existing bridging loan and release equity for their next purchase. Since the initial purchase, the client had converted the property into a 6-bedroom house of multiple occupancy (HMO) and each room was let on its own tenancy.

What was the issue?

My client is a portfolio landlord with all properties held in a personal name, which meant they had to pass strict lender background stress testing to prove affordability.

Furthermore, as the property was a 6-bedroom HMO with each room self-contained units fully let, most high street lenders were not willing to consider lending on it due to its adapted structure. The property was purchased below market value initially, so we needed a lender who can work off open market value. To allow the client to pull out the highest figure possible for their next purchase. Ordinarily, for HMOs of this size, lenders will work off a “bricks & mortar valuation” as opposed to the investment valuation which is based on the rental returns of the property.

What was the process?

After exhausting the options with high street lenders, I approached a few specialist lenders who focus on lending to landlords and specialise in the complexities of HMO lending.

I found a lender who was willing to accept the quirks of the property. Typically, they would have worked off the bricks & mortar valuation however, as we were able to evidence that the property was an overly adapted HMO, they were able to accept an HMO investment valuation. This was agreed via our Relationship Manager as it’s only available via selected intermediaries.

What was the solution?

I was able to secure 75% LTV based on the investment valuation, which was £50,000 higher than the standard valuation. This allowed the client to borrow almost £35,000 more than the usual limits.

I secured a 5-year competitive fixed rate at just over 5% on a full interest only basis. The client was once again delighted with the outcome following their first encounter with LDN Finance, and has since referred me to some of their friends.


Need some help in securing specialist property finance? Our experts are on hand to assist. Call 020 3903 9875 to speak to an adviser, or use our online contact form.

Need expert mortgage advice?
We can help.

Get in touch with our expert residential mortgage advisers today to get started on your property finance journey. Whether you’re buying your first home, upsizing for more space or refinancing your property portfolio, our award-winning mortgage brokers have got you covered.



Our happy clients

Not only have I used LDN Finance myself on several occasions but I also refer clients. They are always exceptionally helpful, quick to respond and go out of their way to help. An absolutely excellent business, I cannot recommend them more highly.

Ms. H

July 2021

5 Stars! The LDN team supported us purchasing our family home, without their support and as an expat it would have been very difficult to obtain our new home in the UK. I would totally recommended them.

Mr. S

August 2021

John and Jennifer make a great team! John was on hand to offer us all options when it came to mortgages, explained any processes that may not have been clear and was always on hand from start to finish. Jennifer kept us informed at all times, really knowledgeable when we had any queries and a joy to deal with. Thank you both!

Mr. A

June 2023

Related Case Studies