Specialist mortgage lender Pepper Money has launched its new product for Houses of Multiple Occupation.
It will enable limited companies and landlords with at least 12 months of homeownership experience to mortgage or remortgage on new and existing HMO houses of up to six bedrooms, provided the property is appropriately licensed at the time of completion.
Pepper says it’s responding to a gap in the specialist lending market for landlords looking to expand and diversify their portfolios. The HMO product will therefore be available on portfolios of up to 10 properties, with rates starting at 5.19%, and a maximum Loan-to-Value of 75%, on properties with a current Energy Performance Certificate rating of A-C.
Affordability assessments will be based on rental income receivable from the property, without the need to provide personal or business bank statements as proof of income. Multiple sources of funds are also accepted to pay deposits, including gifts, director loans, and existing equity. Credit scores aren’t used as part of the assessment of applications.
Pepper claims to take “a human approach to underwriting” assessing mortgage applications on a range of factors beyond just rental income and credit scoring in order to build a clearer picture. It says this makes Buy to Let mortgages more accessible and flexible for landlords.
Terms are available up to 35 years, and lending is available to age 85.
A spokesperson says: “As a specialist lender providing specialised products, we know that landlords are operating within an increasingly complex regulatory environment and navigating affordability challenges which are affecting their behaviour.
“While traditional credit checks are valuable, our approach offers a broader view of financial health, promoting responsible lending and renting practices. HMOs play a vital role in the UK’s private rental market, offering an affordable and accessible option in the face of rising rental demand and a growing gap between the amount of supply available.
“Landlords are an essential part of a viable property market, and our latest product offering aims to provide specialist solutions to help landlords remain in the market.”
