HMO Remortgage: Criteria, Valuation and Costs for Landlords
Remortgaging an HMO means replacing your current mortgage with a new one on a house in multiple occupation, usually with a lender that accepts HMOs. Lenders look closely at your licence, the rent, the property’s condition and how it is valued. The process is more detailed than for a standard buy-to-let, but it is manageable if you prepare early.
We are a local mortgage broker serving Hastings, Eastbourne, Hailsham, Bexhill-on-Sea and the rest of East Sussex, and we advise landlords across the UK.
TL;DR
- Lenders usually want a current HMO licence (or proof of application in some cases), a valid EPC and a specialist valuation.
- Rental cover is tested against an interest cover ratio. One lender publishes 175% for HMOs, and criteria differ between lenders.
- An HMO licence does not prove planning permission or full compliance, and valuers are told to consider both.
- Compare fees as well as rates: completion fees and product fees can change the real cost.
- Start looking around six months before your current deal ends. Everything depends on your circumstances and lender criteria.
Table of Contents
- How an HMO remortgage differs from a standard buy-to-let
- What lenders ask for
- Licences, planning and property standards
- How an HMO remortgage valuation works
- Are HMO remortgages more expensive?
- Timescales and costs to plan for
- Our perspective
- Talk to a local broker about your HMO
- FAQ
- Sources
How an HMO remortgage differs from a standard buy-to-let
A house in multiple occupation is a property let to several people who are not one household and who share facilities such as a kitchen or bathroom. Many councils treat a property with five or more occupants sharing facilities as a mandatory HMO needing a licence, and operating one without a licence is a criminal offence. Some areas also run additional licensing for smaller HMOs, so check with your own council.
For a lender, that means more moving parts than a single let to one tenancy: more tenants, higher management demands, licence conditions and a different valuation basis. Not every buy-to-let lender accepts HMOs, and those that do set their own rules. That is why a broker who can search the whole market is useful here, rather than approaching one lender directly.
If your property is held through a company, the same HMO checks apply, with extra questions about the company and its directors. Our guide to buy-to-let remortgage timing covers the general landlord process.
What lenders ask for
Criteria differ, but one published example shows the kind of thing to expect. The Mortgage Works’ HMO criteria include:
- a relevant current HMO licence for remortgage applications, although proof of an application may be accepted in some cases;
- a valid EPC rated E or better;
- a minimum property value of £100,000;
- a maximum loan to value of 75%;
- a 175% interest cover ratio, applied regardless of tax status;
- a Specialist Security valuation.
That lender also asks for a copy of the licence before valuation, and says the application will be cancelled if it is not received within 15 working days. Another lender, Leeds Building Society, says its valuers independently verify rental income and that confirmation of whether a mandatory or local authority HMO licence is needed must be obtained, with the licence in place before completion.
These are examples, not a rule book. Other lenders will have different loan to value limits, minimum incomes and experience requirements, and criteria change. Our article on buy-to-let minimum income explains one of the common checks.
How the rental cover test works
The interest cover ratio compares the rent with the interest on the loan. At 175%, annual rent must equal 1.75 times the interest due at the lender’s test rate. In simple terms, the higher your loan or the lender’s test rate, the more rent you need, and the less you may be able to borrow against the property.
Licences, planning and property standards
A licence is only one part of the picture. RICS guidance on valuing buy-to-let and HMO properties notes that holding a licence does not guarantee full compliance with local authority requirements, and does not necessarily mean planning permission for HMO use has been granted. Valuers are expected to consider regulatory issues that could lead to enforcement action or affect the sustainable rent used in the valuation.
Before you apply, gather:
- your current HMO licence and its conditions;
- evidence of planning permission or lawful HMO use, where relevant;
- fire safety, gas and electrical safety certificates;
- your EPC;
- tenancy agreements and proof of rent;
- your current mortgage statement and ID.
Missing paperwork is a common cause of delay, so sort it before you apply.
How an HMO remortgage valuation works
HMO valuations are usually done by a surveyor on the lender’s panel. RICS guidance says the likely method is an investment approach, which capitalises sustainable rent at an appropriate yield, subject to local evidence. It also cautions that owners can propose values based on capitalised income that are materially higher than comparable owner-occupied homes.
In practice, this means:
- the valuer may land on a figure different from the one you expect, which affects the loan to value and how much you can borrow;
- evidence of rent, room sizes and compliance supports the figure;
- some lenders value on a bricks and mortar basis, which can be lower than an income-based figure, so ask your adviser which basis applies.
Are HMO remortgages more expensive?
HMO products often sit in their own pricing band, and fees matter as much as the headline rate. Two published examples, which will have moved since:
| Lender | Product detail | Date of source |
|---|---|---|
| Fleet Mortgages | Two-year fixed at 4.59%, five-year fixed at 5.49% for HMO and multi-unit landlords, with a 3% completion fee (minimum £750) | 10 March 2026 |
| Metro Bank | HMO products for remortgage only, for example 4.19% up to 65% LTV and 4.29% up to 75% LTV, with product fees of £1,999 on some lines | 11 August 2026 |
The lesson is to compare total cost over the fixed period, not only the rate. A lower rate with a high fee on a smaller loan can cost more than a slightly higher rate with a low fee. These figures are not an offer, and the rate you are offered depends on your property, loan to value and lender criteria.
Timescales and costs to plan for
Allow time for the licence check, valuation, legal work and underwriting. Starting around six months before your fixed rate ends gives you room if the valuer or lender raises a question. If your deal ends before completion, you may drop onto your lender’s standard variable rate, so timing matters. Our East Sussex guide to checking early repayment charges before a fix ends explains what to look at first.
Costs can include a valuation fee, a lender arrangement or completion fee, legal fees and broker fees. We can explain which apply to you before you commit. Our fee details are on our fees page.
Our perspective
Landlords with HMOs often tell us the rate is not the hardest part. It is knowing which lenders will look at the property, and having the licence, rent evidence and certificates ready before the valuer visits.
We take a whole-of-market approach and explain costs and risks clearly, so you can see the choices before you decide. We do not promise approval or the lowest rate, because the outcome depends on the property, your finances and lender criteria.
Where it fits, we also look at the wider picture, such as ownership structure and protection for the income that pays the mortgage.
Paul McMath CeMAP CeRER
Talk to a local broker about your HMO
We are a Hastings-based advice firm helping landlords with buy-to-let and limited company mortgages, as well as remortgages. If your fixed rate is ending or you want to review your borrowing, we can talk through your options and the criteria that may apply.
See our remortgage services or start from our buy-to-let and limited company mortgage advice.
FAQ
Do I need an HMO licence to remortgage?
If your property needs a licence, lenders will generally expect to see it. Some, such as The Mortgage Works, may accept proof of an application in some cases, while others want the licence in place before completion. Check your council’s rules and your lender’s criteria.
Does an HMO licence mean I have planning permission?
No. RICS guidance says a licence does not necessarily mean planning permission for HMO use has been granted, and valuers must consider that. Keep your planning evidence with your licence paperwork.
Why might the valuation come in lower than I expected?
Valuers use evidence from the market and the sustainable rent, and RICS cautions that owner-proposed income-based values can be materially higher than comparable homes. A lower figure can reduce the loan available to you.
Are HMO mortgages more expensive than standard buy-to-let?
They can be priced differently, and fees vary between products. Compare the rate, fees and term together. Your adviser can compare current options for your property.
Sources
- HMO criteria, The Mortgage Works for Intermediaries
- Mortgage Lending Criteria and Guidance, Leeds Building Society
- Valuation of buy-to-let and HMO properties, RICS
- Fleet Mortgages relaunch of 75% LTV fixed-rate products
- Metro Bank buy-to-let mortgage range
- Criteria for HMO licensing, Southampton City Council
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- Save on fees: UK semi commercial mortgage costs, 65–75% LTV
- Self-Employed Remortgage: What Lenders Need to See
This article provides general information and is not a personal mortgage recommendation. Mortgage availability and eligibility depend on your circumstances and lender criteria. Rates and criteria can change. We will explain any applicable fees before you commit. Think carefully before securing other debts against your home. Consolidating debts over a longer term may reduce your monthly payments but increase the total amount you repay. Your home may be repossessed if you do not keep up repayments
