Listen to this episode below:
Today I’m delighted to be joined by Adrian Moloney, Sales Director of OneSavings Bank, however you’ll likely be more familiar with their trading companies Kent Reliance and Interbay Commercial.
Knight Knox are one of the leading UK property consultancies with a focus on sourcing, developing and selling city centre residential property.
With over 80 developments launched across the UK’s top rental markets, they have a wealth of local market knowledge which they share for free through their city specific buy to let guides. You can request your copy of these guides and get expert advice from their property consultants at knightknox.com.
HMO Mortgage Products
I’ve asked Adrian to come on the show to unravel some of the myths and uncertainties around mortgages, particularly relating to HMO specific products, as it seems to be a common area of disagreement and potential dangerous misinformation.
Who do OneSavings Bank lend to?
Working with OneSavings Bank brings a number of benefits, namely that it’s a more personal experience. The team are very experienced, and judge every case individually vs it being a computer assessment. This means they can look at each applicant on a much more personal basis, instead of automatically declining them if they don’t meet a set list of criteria.
Adrian points out that because the products they offer are so attractive (up to 85% LTV for existing landlords) they need to ensure they are comfortable who they are lending to, and therefore use approaches such as interviews, asking for profit & loss statements or business plans to truly understand their client. With no minimum income requirements as per traditional mortgages, these products are there for those with a truly great project regardless of their personal circumstances.
The HMO market is becoming increasingly popular due to the favourable returns and high yields, so there needs to be products out there that work for the landlord. Kent Reliance & Interbay offer up to 80% LTV for first time landlords, providing the deal stacks up.
Commercial Vs Bricks & Mortar
A common debate at the moment, and one that continues to be shades of grey vs black and white, is whether or not a HMO can achieve a commercial revaluation. Adrian cautions that whilst it is possible, the most important thing is for landlords to do their research up front, be realistic with end valuations and ensure the deal stacks regardless of product used.
In the case of OneSavings Bank, it is becoming slightly more clear cut though. Kent Reliance tend to offer traditional Bricks & Mortar mortgages, whereas Interbay look after the Commerical products. As a general rule of thumb, they would see small HMOs (six bed or less) fitting into the Kent Reliance product range, and large HMOs (more than six beds) leaning towards Interbay and the commercial products.
When it comes to calculating the valuation, some general principles are applied. Kent Reliance will follow that of a standard Bricks & Mortar valuation, looking for local comparables. They will however look at nearby HMO’s, and take this into account. The team are educated on HMO’s, and appreciate that a standard residential next door is not a fair comparable.
Interbay allow yield based valuations, meaning the market value is calculated by taking the annual rent, divided by the yield and multiplied by 100.
Adrian Moloney’s Links & Resources
OneSavings Bank are only available through intermediaries, which means their products are only accessible via a broker.
OneSavings Bank Website – Visit their website to read about the different product offerings
Harvey Bowes Mortgage Broker– Our recommended mortgage broker, who have access to these products. Tell them we sent you!