HMO Bridging Finance
Fast Financing for HMO Properties
Introduction
HMO (House in Multiple Occupation) bridging finance is a specialized type of short-term loan designed to help property investors purchase or refurbish HMO properties. Whether you're an experienced investor or new to the HMO market, this guide will walk you through everything you need to know about HMO bridging finance, from how it works to how you can apply.
At Aura Capital, we specialise in bridging loans tailored for HMO (House in Multiple Occupation) investors, landlords, and developers. Whether you're purchasing, refurbishing, or converting a property, our HMO bridging finance solutions provide the speed and flexibility you need to secure opportunities and maximise returns.
Key Features:
Up to 80% net LTV (Loan to Value) – Market leading leverage.
75% LTGDV – Ideal for larger, high-value construction projects.
Drawdowns – Flexible funding to match your project timeline.
Retained/Rolled interest – No monthly payments, easing cash flow during your project.
No ERC (Early Repayment Charge) – Minimum interest period of just 3 months.
Below Market Valuations (BMVs) available – Secure even better deals on your property investments.
Ready to take the next step?
Contact us today to explore how our HMO bridging finance can work for you.
What is HMO Bridging Finance?
HMO bridging finance is a short-term loan used to fund the purchase or renovation of HMO properties. It’s ideal for investors who need quick access to capital to secure a property or complete refurbishments before refinancing or selling. Unlike traditional mortgages, bridging loans are flexible and can be arranged quickly, making them a popular choice for property investors.
How Does HMO Bridging Finance Work?
Application: Submit your details and property information to a lender.
Valuation: The lender assesses the property’s value.
Approval: If eligible, you’ll receive an final offer outlining the loan terms.
Funds Released: The loan amount is transferred to you, often within 5 working days of legals.
Repayment: You repay the loan (typically within 12-24 months) through refinancing, property sale, or other means.
Benefits of HMO Bridging Loans
Fast Funding: Get access to capital in as little as 48 hours.
Flexible Terms: Tailored repayment options to suit your project.
No Monthly Payments: Some lenders offer rolled-up interest, meaning you pay at the end of the loan term.
Versatile Use: Ideal for purchasing, refurbishing, or converting properties into HMOs.
High Loan-to-Value (LTV): Borrow up to 75% of the property’s value.
Eligibility Criteria for HMO Bridging Finance
To qualify for HMO bridging finance, lenders typically look for:
A strong exit strategy (e.g., refinancing or selling the property).
Evidence of property investment experience.
A clear plan for the HMO project (e.g., refurbishment or conversion).
A minimum property value (varies by lender).
How to Apply for HMO Bridging Finance
Apply online: complete our online application form.
Prepare Documents: Gather your property details, insurance, licenses, schedule of works and your exit strategy.
Receive Offer: If approved, review the loan terms and accept the offer.
Access Funds: Once the loan is finalised, the funds will be released to you
FAQs About HMO Bridging Finance
Q: What is the maximum loan amount for HMO bridging finance?
A: Most lenders offer up to 75% of the property’s value, but this can vary. We are able to offer up to 80% net on certain HMO’s where there is a solid business plan and exit strategy in place.
Q: How long does it take to get approved?
A: Approval can take as little as 12 hours, depending on the lender, valuation basis and your application.
Q: Can I use HMO bridging finance for refurbishments?
A: Yes, many investors use bridging loans to fund property refurbishments or conversions.
Q: What happens if I can’t repay the loan on time?
A: It’s crucial to have a solid exit strategy. If you’re unable to repay, you may face additional fees or need to refinance.
HMO Bridging Loan Example
Property Purchase Price: £200,000
Refurbishment Costs: £50,000
Total Project Cost: £250,000
Post-Refurbishment Value (GDV): £350,000
Bridging Loan Details:
Loan Amount: Up to 80% LTV of £250,000 = £200,000 (or 75% LTGDV of £350,000 = £262,500, whichever is lower).
Interest Rate: 0.75% per month (rolled up)
Term: 12 months
Repayment: Refinance with a long-term mortgage after refurbishment.
Benefits of Using Bridging Finance for HMO Investments
Speed: Funds can be accessed quickly, allowing you to act fast on property opportunities.
Flexibility: Loans can be tailored to suit your project’s needs, with staged drawdowns and rolled-up interest.
High LTV/LTGDV: Up to 80% LTV or 75% LTGDV ensures you have sufficient capital to complete the project.
No ERC: Early repayment without penalties provides flexibility and cost savings.
Exit Strategy
Once the refurbishment is complete and the property is operational as an HMO, you can:
Refinance: Secure a long-term mortgage to repay the bridging loan.
Sell the Property: If the market conditions are favourable, you can sell the property to repay the loan and realise a profit.
Conclusion
Bridging loans offer a flexible and efficient way to fund HMO investments, from securing planning permission and licensing to completing refurbishments and refinancing. With high LTV/LTGDV ratios, rolled-up interest at 0.75% per month, and no early repayment charges, bridging loans are an ideal solution for investors looking to maximize their returns on HMO projects. Always consult with a bridging finance specialist to ensure the loan terms align with your project goals and timelines.
Need Help?
If you’re considering an HMO project and need assistance with bridging finance, planning permissions, or property management, our team is here to help.
Contact us today to explore your options and take the next step toward your investment goals!
Check out our blog posts and case studies on HMO’s.
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HMO Bridging Finance is a short-term loan designed for investors purchasing or refurbishing Houses in Multiple Occupation (HMO). With loan amounts ranging from £50,000 to £25 million and funding available in as little as 10 days, it offers a fast and flexible way to acquire or upgrade properties whilst receiving funding for the improvements made to the property. The loan typically lasts between 3-24 months, with no credit scoring and no upfront or exit fees.
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Yes, some lenders, including Aura Capital, offer HMO Bridging Finance with No Valuation. This speeds up the approval process and eliminates delays caused by formal property assessments. It is particularly useful for investors looking to complete time-sensitive purchases, such as auction properties or distressed sales.
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ast Funding: Access funds in as little as 10 days.
High LTV: Up to 80% net of the property’s value.
No Credit Scoring: Approval is based on property potential.
100% Refurbishment Costs Covered: Ideal for conversions or upgrades.
No Upfront or Exit Fees: Transparent and cost-effective financing.
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An Article 4 Direction restricts permitted development rights, meaning full planning permission may be required to convert a property into an HMO. Investors should check local regulations before purchasing. Our bridging loans can help secure properties in these areas while awaiting planning approval.
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The BRRR (Buy, Refurbish, Rent, Refinance, Repeat) strategy is a popular HMO investment method:
Buy a property using bridging finance.
Refurbish using 100% refurbishment funding.
Rent it out to tenants to generate income.
Refinance with a long-term HMO mortgage to repay the bridging loan.
This strategy allows investors to maximize returns with minimal upfront capital.
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A clear exit strategy (refinancing or sale).
Experience in property investment (preferred but not required).
Property suitability, ensuring it meets licensing and regulatory requirements.
Ability to provide security, typically through the HMO property itself.
