Foundation Home Loans has enhanced its buy-to-let range further with a new HMO product (House in Multiple Occupation).
The mortgage is available to both individual landlords and limited company investors that have previous experience in letting private rental properties.
The new HMO product offers both two and five-year fixed rates, starting at 3.19% and 3.49% respectively, with no pricing difference for limited company borrowers.
The rental stress calculations are the same as the lender’s other buy-to-let products, for example, 125% x pay rate on a five-year fixed rate deal for limited companies.
The maximum loan size on the new HMO product is £500,000, with a maximum term of 30 years and maximum age of 75-years-old at the end of the term – though there is no maximum age for limited company applicants.
An HMO is a dwelling rented by more than three unrelated tenants using the same amenities.
The Foundation Home Loans product is for a minimum property value of £75,000. The offer covers HMOs with up to eight bedrooms, while intermediaries can also access the product for multi-unit blocks of up to ten flats.
The Marketing Director of Foundation Home Loans, Jeff Knight, comments on the new HMO product: “We know that landlords with HMOs continue to achieve the highest rental yields – 1.1% above the average, according to recent research by BDRC – and seem to be growing in popularity.
“Speaking to some of our intermediary partners, they are very delighted to be able to offer more choice to their clients with our new product range to help with their demand.”
Foundation Home Loans’ products are only available through intermediaries, and are designed for clients with more complex needs. It has also now launched a residential product range, in addition to its established buy-to-let offering.
Increasing numbers of landlords are choosing to invest through a limited company structure to avoid the Government’s recent and ongoing reduction in mortgage interest tax relief. However, we recommend that all landlords seek professional financial advice before making this decision.