The HMO play has a financing gap in the middle: buy an ordinary house, convert and license it, then refinance as an income-producing HMO at its new value. Term lenders won’t fund the middle — the property is a building site with no HMO licence yet. That middle is exactly what a bridge is for.
Buying the property
Bridging completes at auction pace and doesn’t mind that the property is currently a tired three-bed with no licence — we lend on residential investment security at up to 70% LTV, from 0.79% per month. Buying through an SPV or limited company is standard for HMO investors and standard for us.
Funding the conversion
Works — from light reconfiguration to full conversion with en-suites and fire compliance — can be funded alongside the purchase with refurbishment finance. Size the term honestly: conversion, building control, licensing and tenanting rarely fit inside six months. Terms run to 24 months so the licence application and first tenancies can complete before you refinance.
The exit
The usual exit is a specialist HMO mortgage against the converted, licensed, income-producing property — typically at a valuation reflecting its rental income rather than bricks alone. A sale to another investor works too. We will want the exit named at the start: which lender type, at what value, on what income assumptions.
Frequently asked questions
Can I get a bridging loan to convert a house into an HMO?
Yes — that’s the standard use. The bridge funds the purchase and conversion period that HMO mortgage lenders won’t touch, and the HMO mortgage refinances it once the property is converted, licensed and let.
Do I need an HMO licence before borrowing?
No. The whole point of the bridge is that it covers the period before the licence and tenancies exist. You’ll need the licence for the exit mortgage, so build the application into your timeline.
Can I buy an HMO through a limited company or SPV?
Yes — most of our HMO borrowers use an SPV or limited company, and we lend to both routinely.
Fund the conversion
Tell us the property, the works budget, and the intended room count and rent. Same-day answer.