Compare Pay Rates, Fees and Real Cost Before You Choose an HMO Mortgage
HMO mortgage rates are not one number. Two HMOs in the same street can be offered rates a full point apart, because the price depends on the loan to value, the fee, the size of the property, who is borrowing and how much experience they have. This page sets out where HMO rates sit in November 2026, how to read them and what moves yours up or down.
Rates here are indicative and based on market data at 1 November 2026. Your rate depends on your case. Treat the figures as a starting range and not as a quote.
Rates last reviewed 1 November 2026 by Daniel Yorke, Founder.
Current HMO Mortgage Rates UK: November 2026
The figures below are for a limited company borrowing up to 75% loan to value on interest only, with 125% rent cover. The pay rate is the rate you are charged. The effective rate spreads the arrangement fee over the fixed period and is the better way to compare deals.
| Product | Pay rate | Effective rate |
|---|---|---|
| Small HMO (3 to 6 rooms), 5-year fixed | 4.77% to 6.88% | 5.82% to 6.97% |
| Small HMO (3 to 6 rooms), 2-year fixed | 3.55% to 7.34% | 5.95% to 7.38% |
| Large HMO (7 or more rooms), 5-year fixed | 4.77% to 7.34% | 5.91% to 7.51% |
| Large HMO (7 or more rooms), 2-year fixed | 3.55% to 8.24% | 6.04% to 8.79% |
| 2-year tracker, small and large HMO | 3.95% to 6.74% | 5.94% to 8.29% |
Notice how wide the pay rates are, and how much narrower the effective rates are. The lowest pay rates come with the highest fees. A deal that looks cheap on the headline can cost about the same as a dearer rate with no fee.
How to Read an HMO Mortgage Rate
Pay rate. This sets your monthly interest. A 5.9% pay rate on a £300,000 interest-only loan costs £1,475 a month.
Arrangement fee. HMO lenders charge anywhere from nothing to 7% of the loan, or a flat fee of a few thousand pounds. Some let you add it to the loan, which raises the loan and the interest on it.
Effective rate. This spreads the fee across the fixed period. It is the cleanest way to compare a low rate with a high fee against a higher rate with none.
Early repayment charge. Most fixed rates carry a charge for leaving early, commonly stepping down each year of the fix. If you may sell or refinance within the term, the charge matters as much as the rate.
What Sets Your HMO Mortgage Rate
Loan to value. The lower the loan, the lower the rate. Most HMO lenders go up to 75%, a few reach 80% on smaller licensed properties, and the best pricing usually sits at 65% to 70%.
Size of the property. Standard HMOs of up to six rooms have the widest choice of lenders. Large HMOs of seven or more rooms have fewer, and the effective rate is often slightly higher.
Fix length. A 5-year fix is commonly cheaper to qualify for than a 2-year fix, for a reason covered below.
Who is borrowing. Lenders price limited companies and individuals a little differently. At specialist HMO lenders the gap is often small, and the structure matters more for tax and for how much rent cover is required.
Your experience. Landlords already running an HMO get more lenders and better pricing. First-time landlords are offered fewer deals, often at a lower loan to value.
Licence, planning and condition. A licensed property with the right planning use, fire safety in place and a good EPC rating is easier to price. A property with gaps may not be lendable at any rate.
How the property is valued. A few lenders value an HMO on its income instead of on bricks and mortar. That can lift the value and cut the loan to value, which lowers the rate on offer. Commercial valuations are priced on yield, and the range is wider.
Why Fix Length Changes How Much You Can Borrow
Lenders test whether the rent covers the interest at a stress rate, and the stress rate depends on the fix. A 5-year fix is usually tested at or close to the pay rate. A 2-year fix is typically tested at the pay rate plus around two points, with a floor of about 5.5%.
Take an HMO earning £43,200 a year in rent, borrowed through a company at 125% cover and a 5.9% pay rate. On a 5-year fix tested at 5.9%, the rent supports a loan of about £585,800. On a 2-year fix tested at 7.9%, the same rent supports about £437,500. Same property, same rent, same rate, and a difference of around £148,000 in what the rent supports.
Loan to value may cap the loan lower than either figure, which is why the calculator shows both limits side by side.
Fix length changes the stress rate, and the stress rate changes how much the rent supports.
Worked Cost Example: Fee Against Rate
A company borrows £300,000 on a 5-year fixed rate, interest only. Three deals are on the table.
- Deal A: 5.9% pay rate with a 2% fee. Interest is £1,475 a month and the fee is £6,000. Over five years the cost is £94,500, about 6.3% a year.
- Deal B: 5.2% pay rate with a 5% fee. Interest is £1,300 a month and the fee is £15,000. Over five years the cost is £93,000, about 6.2% a year.
- Deal C: 6.9% pay rate with no fee. Interest is £1,725 a month. Over five years the cost is £103,500, which is 6.9% a year.
Deal B has the lowest monthly payment and almost the same total cost as Deal A, but it needs £9,000 more cash at the start unless the fee is added to the loan. Deal C needs the least cash and costs the most. Which one is right depends on how much cash you have, how long you plan to keep the loan and how tight the monthly cash flow is.
Remortgaging an HMO: What Changes
When you remortgage, the rate is set by the current value and the loan you want, and the fee can often be added to the loan. If you are raising cash, the loan to value rises and so does the price. Check the early repayment charge on your current deal first, because leaving early can wipe out the saving from a lower rate.
Many landlords remortgage at the end of a fix to avoid the lender’s standard variable rate, which is usually well above the market. Starting the search three to six months before the fix ends gives you time to secure a product and complete before the rate rolls over.
How to Get a Better HMO Mortgage Rate
- Lower the loan to value. Each step down, often at 70%, 65% and 60%, can open cheaper tiers.
- Compare on effective rate and on cash flow, not on the pay rate alone.
- Have the licence, planning decision, fire risk assessment and EPC ready before you apply, and show room-by-room rent evidence.
- Show your experience. A short portfolio summary and a track record of occupancy help the lender price the risk.
- Ask whether the property qualifies for an income-based valuation, and for how that changes the loan to value.
- Compare structures. A limited company, a personal name and a mix of fix lengths all give different rates and different borrowing power.
Use the calculator to test any of these before you apply. It shows the most the rent and value support, the cash you need and the monthly cash flow at your rate.
A lower rate with a higher fee can cost about the same as a higher rate with none.
HMO Mortgage Rates Compared With Buy to Let
A standard buy to let on a single tenancy is usually cheaper than an HMO, because lenders treat the HMO as more complex: more tenants, more turnover, a licence to maintain and a smaller pool of lenders. The gap varies with the lender and the property. In return an HMO often earns more rent than the same house let to one household, which is why many landlords accept the higher rate.
How a Broker Helps With HMO Rates
Published rates are an average of what the market offers, and the best deals are not always the ones advertised. Lenders also treat the same HMO differently, and some will lend where others decline. A whole-of-market broker can see which lenders fit your property, your licence position and your experience, and can compare the effective rate and not only the headline.
Frequently Asked Questions
What are current HMO mortgage rates in the UK?
In November 2026 effective rates for a limited company borrowing up to 75% loan to value run from about 5.8% to 7.0% on a small HMO 5-year fix, and a little higher for large HMOs and 2-year fixes.
Pay rates are wider, because the lowest ones carry the highest fees.
Are HMO mortgage rates higher than buy to let?
Usually yes.
Lenders see an HMO as more complex than a single let, with more tenants, more turnover and a licence to maintain. The gap varies with the lender and the property.
What is the difference between a pay rate and an effective rate?
The pay rate is the interest rate you are charged.
The effective rate spreads the arrangement fee over the fixed period. It shows the true cost of the deal and lets you compare a low rate with a high fee against a higher rate with none.
What is the arrangement fee on an HMO mortgage?
It ranges from nothing to about 7% of the loan, or a flat fee of a few thousand pounds.
Low-fee and no-fee deals usually carry higher interest rates.
Is a 2-year or 5-year fix better for an HMO?
A 5-year fix is usually tested at or near the pay rate, which can raise the loan the rent supports.
A 2-year fix is tested at a higher stress rate. The right choice depends on how long you plan to hold the loan and whether you expect to refinance.
What loan to value can I get on an HMO?
Most lenders go up to 75%, a few reach 80% on smaller licensed properties, and large HMOs and semi-commercial properties are often lower.
The best pricing is usually at 65% to 70%.
Do I need a licence to get an HMO mortgage rate?
If the property needs one, yes.
Most lenders want the licence granted before completion, and a property without it may not be lendable at any rate.
Can I remortgage an HMO to get a better rate?
Yes.
Check the early repayment charge on your current deal first. A remortgage at the end of a fix usually avoids the lender’s standard variable rate and can release cash if the value supports it.
Get the Right HMO Mortgage Rate
Commercial Finance Network is a whole-of-market broker working with property investors, developers and businesses across the UK and internationally. As a specialist commercial finance broker, we work across the full specialist HMO lender panel and will tell you which lenders will engage with your property, what loan to value and rate to expect, and how to structure the application before anything is submitted. We are directly authorised and regulated by the Financial Conduct Authority.
Your property may be repossessed if you do not keep up repayments on a loan secured against it. Many HMO mortgages are not regulated by the Financial Conduct Authority in the way a residential mortgage is.
Call: +44 1494 622 111
Email: info@cfnuk.com
Related Pages
- HMO Finance – whole-of-market mortgages for HMO purchases and refinances.
- HMO Remortgages – switch lender or release equity on an HMO.
- HMO Mortgage Requirements UK – what lenders ask for before they lend.
- HMO Lending: Residential vs Commercial – how valuation changes the loan on offer.
- Everything You Should Know About HMO Finance – the full picture on HMO borrowing.
