HMO Mortgage Jargon Buster

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If you’re reading up on HMO Mortgages, it’s highly likely that you’ll come across unfamiliar terms. ABC Finance Ltd has compiled this jargon buster guide to make sure you can read through our advice pages and product descriptions with confidence.

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HMO Mortgages: Common Terms & Definitions

Adverse Credit

This includes missed mortgage payments, defaults or County Court Judgements (CCJs) – anything that could be considered a red flag to a potential lender.

Agreement in Principle (AIP)

When you submit an initial application to a lender and it’s successful, you will obtain an AIP. This usually involves a credit search.


The annual percentage rate (APR) is the complete cost of the loan for the whole term, taking account of the interest and fees.

Base Rate

This is a rate set by the Bank of England, if you opt for a tracker or variable rate it will usually move in line with the Bank of England base rate.

Buildings Insurance

Buildings insurance is a requirement of any mortgage. Usually, the policy will need the mortgage lender’s name included.


This is the amount of money borrowed.


When you buy, sell or refinance a property, there will be legal work involved. This is known as conveyancing.


This is the money that you put into a deal. If a 75% LTV (Loan to Value) mortgage is obtained, a 25% deposit will be required.

Early Repayment Charges (ERCs)

If you repay the mortgage early (e.g. within a fixed rate period), there will usually be a fee to pay. This is usually a percentage of the loan.


This is the capital value of the property you own. If the property is valued at £100,000 with a £75,000 mortgage owed, you have £25,000 (or 25%) equity.

Fixed Rate

An interest rate for a period of time, say 3 years. This means your payments will stay the same for the fixed rate period.

Lender Arrangement Fee

Most HMO lenders charge a fee for arranging the mortgage, this fee can usually be added to the loan.

Loan to Value Ratio (LTV)

This is the loan amount compared to the property value, if a property is valued at £200,000 with a £150,000 mortgage, the mortgage is 75% of the value giving a 75% LTV.

Monthly Repayment

The amount you have to pay back to the lender each month.

Mortgage Term

How long the mortgage is taken out over, say 25 years.


This is when you replace an existing mortgage with another.

Repayment Vehicle

If the loan is interest-only, the full original loan will need to be repaid at the end of the term. The repayment vehicle is the means by which you will repay the loan (e.g. by selling the property).

Stamp Duty

Stamp duty land tax (SDLT) is a tax payable when you buy a property. Different property values have different rates of tax to pay.


When you borrow money against a property, a valuation of the property will be carried out to make sure the lender is happy to lend.


About The Author

Lee has built a wealth of knowledge and expertise within the commercial finance sector and has sat on the family management team since 2007. His knowledge of the complex residential investment market led to our growth in the HMO and commercial property investment markets. Lee combines his work on HMO and complex investment properties alongside his work in the bridging loan, commercial mortgage and development finance markets.

Lee Hemming CeMAP  -  
Sales Director

Want To Find Out More…?

If you are unsure about any of the terms relating to your HMO mortgage please feel free to ask us. Our team of experts are on hand to provide impartial advice and help you find the right product to match your circumstances. We’re here to answer any questions on 01922 620008. Please also use the panels below to read more on HMO Mortgages.