HMO Design & Build Finance
Converting a house into a licensed HMO, or building one from the ground up, isn’t something a standard purchase mortgage covers. You need finance that pays for the works themselves – the building, the room conversions, the new bathrooms – then converts into a normal term mortgage once the property is finished, licensed and let.
We arrange this kind of development finance for expat investors as part of our HMO work, alongside standard HMO mortgages for properties that don’t need conversion.
How the funding actually gets released
Rather than one lump sum, money is released in stages as work progresses – typically checked against a schedule of works agreed upfront, with a surveyor confirming each stage has actually been completed before the next drawdown is released. This protects the lender, but it also means your project timeline needs to be realistic, since delays affect when you can draw the next tranche.
What lenders want to see before agreeing finance
- Planning permission and building regulations sign-off where required for the conversion or build
- A realistic schedule of works with costed stages
- A clear plan for licensing the finished property with the local council
- An exit strategy – usually refinancing onto a standard HMO mortgage once complete and let
Getting the exit plan right at the start matters more than people expect. Lenders offering the development finance want to know how you’ll actually pay them back, and “I’ll sort it out later” isn’t a plan they’ll accept.
Our fees
£295 application fee, 1% completion fee on the eventual term mortgage.
Frequently Asked Questions
Do I need planning permission before applying for finance?
Often yes, or at least a clear application in progress – lenders want confidence the project can actually proceed.
How is the money released during the build?
In stages, checked by a surveyor against agreed milestones, rather than as one upfront payment.
What happens if the project runs over budget?
We’d need to discuss additional funding options with the lender – it’s worth building contingency into your original costings to avoid this.
Can I do this as a first HMO project, or do I need experience?
Some lenders want to see prior property development or landlord experience; others are more flexible – worth discussing your background with us early.
How long does the whole process take, start to finish?
Very project-dependent, but budget for several months minimum between initial finance and refinancing onto the term mortgage.
Get in touch with your project plans and we’ll talk through what’s realistic and which lenders fit.
