Thorough research is even more important for investors’ holiday lets and houses in multiple occupation (HMOs), findings from Mortgage Broker Tools (MBT) have suggested.

Analysis of cases processed through the MBT research platform revealed that over the course of 2021, while there has been a sizeable difference of £221,173 between the average maximum loan and the average minimum loan size available to buy-to-let (BTL) investors across the market, this differential is increased for HMO and holiday let investments.

The average maximum loan available on an HMO investment so far in 2021 has been £401,384, while the average minimum loan is £164,119 – a difference of £295,636.

MBT highlighted this difference between the average maximum and minimum loan sizes available to HMO investors is nearly £40,000 more that the average UK house price of £256,000, according to figures from the Office for National Statistics (ONS).

MBT CEO, Tanya Toumadj, commented: “Choosing the right lender makes a bigger difference on specialist BTL investments, such as HMOs and holiday lets, which are becoming more popular due to the bigger yields they can deliver.

“This is because of the variety of ways that different lenders will calculate affordability on these types of investments. Some lenders, for example, will calculate affordability based on the property being let on a standard AST, even though in reality, it would have a greater earning potential.

“Criteria is also key for specialist BTL investments as there are many nuances that can impact whether or not a lender is able to lend on a property. So, comprehensive research at the outset is a must for brokers who want to take advantage of this growing opportunity and the best way to do that is with the most comprehensive platform available in the market.”

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