5-Year Fixed Rate HMO Remortgage for a UK Landlord

• Client: UK Landlord
• Property: Large HMO valued at circa £1 million
• Mortgage: Approximately £700k
• Product: 5-year fixed rate at 4.7%
• Product Fee: 5%, added to the mortgage

Enness was approached by a repeat client with whom we had previously structured a range of borrowing solutions. The client owns a substantial property portfolio and regularly reviews their financing arrangements to ensure they remain aligned with their wider investment strategy. On this occasion, the client was looking to refinance a large HMO property valued at approximately £1 million, with around £700k of mortgage borrowing.

The property was one of the client’s strongest-performing assets, making it particularly important to maintain a healthy level of monthly cash flow. However, the significant increase in UK interest rates over recent years has created additional pressure for landlords, with many seeing their monthly mortgage costs increase substantially when refinancing.

For professional portfolio landlords, managing the ongoing cost of borrowing is particularly important. Lower monthly interest payments can help maintain cash flow across the wider portfolio, while refinancing can also provide opportunities to release capital from properties that have increased in value and reinvest it into further acquisitions or improvements.

In the current market, one strategy available to landlords is to consider paying a higher product fee in exchange for a lower interest rate. While this increases the initial cost of arranging the mortgage, it can reduce monthly interest payments over the fixed-rate period and may therefore be appropriate where maintaining cash flow is a priority.

Enness reviewed the client’s requirements and secured a buy-to-let mortgage with a five-year fixed rate of 4.7%. The mortgage included a 5% product fee, which was added to the loan rather than requiring the client to fund the fee separately.

The structure allowed the client to secure a significantly more competitive rate while keeping their monthly interest payments broadly in line with those under their previous mortgage facility. This provided greater certainty over borrowing costs for five years and helped preserve the cash flow generated by the HMO.

The case demonstrates why professional landlords should consider the overall cost and structure of a mortgage rather than focusing solely on the headline product fee. A higher upfront fee can, in some circumstances, be offset by lower monthly interest costs over a longer fixed-rate period, depending on the borrowing amount, term and individual circumstances.

For landlords with substantial property portfolios, regular reviews of existing finance can also help identify opportunities to improve cash flow and ensure borrowing remains aligned with the wider investment strategy. Enness works with a broad network of lenders to structure property portfolio mortgages around individual landlord requirements.

If you are reviewing the financing on an existing HMO or property portfolio, speak to a mortgage specialist to discuss your options.

Risk Warning:
Buy-to-let and property investment finance carries risks. Property values and rental income can fall, while interest rates and other costs can change. Borrowers should ensure that rental income and other available resources are sufficient to meet mortgage obligations. Failure to meet repayment obligations could result in enforcement action against the secured property.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, property assessment and lender criteria. Terms and availability will vary depending on individual circumstances and the proposed transaction.