Preparing for an HMO mortgage application
To prepare you for your HMO mortgage application, here is a typical list of the documentation we will ask for before proceeding:
- Application form or ‘Fact Find’. This document gives the lender vital info about the applicants. If this is a limited company application, the director’s details will be required.
- Passport (for proof of ID).
- Driving licence (for proof of ID).
- Recent utility bill (for proof of home address. If you have lived at your current address under three years and are not on the electoral roll, previous proof of address history could be needed).
- Latest three months payslips and latest P60 if employed (for proof of income).
- Latest 2 – 3 years SA302 with tax overview form if self-employed (for proof of income).
- Latest three months’ bank statements for all accounts held (to show how you conduct your banking and control income and expenditure).
- Proof of deposit (if from savings, up to 12 months statements could be asked for to show a build-up of funds). Any lender will need to be clear as to where the deposit has come from.
- If the deposit is a gift from a relative, a gifted deposit letter signed by that relative will be required.
- Details of the HMO license.
- Tenancy agreements or leases if available.
- Current property portfolio schedule (to demonstrate your property lettings experience).
- Credit report (if you feel you may have adverse credit it is worth sending your broker a credit report).
Proof of ID and residency
These documents are required to prove that you are who you say you are, and act as a tool to prevent mortgages being fraudulently taken out in the names of others.
Proving your identity and address is a legal requirement and is done separately by both the lender and your solicitors.
Proof of deposit
This must be done in order to meet anti money laundering regulations and is an absolute must. Where funds are coming from more than one source, each one must be documented fully.
Any discrepancies here can cause serious issues, so taking extra time to document things properly will pay dividends later down the line.
Declared income on existing rental portfolio
This area is becoming a much greater issue for lenders, proof of income must show rental income on your HMRC documents to ensure that tax is paid on your existing properties.
Where this can’t be proven, we may struggle to assist you, as all lenders now make this a condition of lending. Funding for previously unpaid tax could potentially be arranged using a bridging loan.
If you can’t provide any of the documents above, please tell your advisor upfront and we will take this into account when sourcing a mortgage for you.