An 55% Loan to Value (LTV) HMO Mortgage is a product where an HMO lender allows a borrower, to borrow up to 55% of the HMO property value or purchase price.
This means the borrower is required to put in 45% cash or equity deposit, plus any purchase costs (stamp duty, legals, etc) to complete the HMO property transaction.
Loan to Value (LTV) is calculated as a percentage (%). It’s how much you’re looking to borrow versus the value of the property, you’re looking to purchase or remortgage. If you know how much you’ll need to borrow, just divide the mortgage amount by the value of the property. To use an example, £137,500 ÷ £250,000 = 0.55. Then multiply that by 100 and you get 55% LTV.
LTV is important to think about because it determines the HMO mortgage rate, and affects how HMO mortgage lenders calculate whether the HMO mortgage is right for you. The lower your LTV, the lower the rates, and the more mortgage options you’ll have.
A 55% Loan to Value (LTV) HMO mortgage is in the middle of the typical range. HMO lenders typically offer between 30% and 85% loan to value. With 55% LTV, you’ll have many great options to choose from. It allows the borrower to benefit from having a medium sized loan to value in exchange for a medium rate of interest. It means that over the long term you’ll pay an intermediate rate of interest compared to higher or lower loan to value products.
Keeping your exposure to mortgage debt to a managable level amount.
Monthly HMO mortgage payments low allowing you to maximise cashflow.
Access to huge number of HMO mortgage products.