Castle Trust Bank has broadened its TermTen buy-to-let offering by adding a new price category targeting medium HMOs with seven to 10 rooms. The key feature is a five-year fixed rate of 5.99% available up to 75% loan-to-value, with loans starting at £200,000. This move addresses a segment often overlooked by lenders, where financing options can be limited or come with higher costs.
From an investor’s perspective, the 5.99% fixed rate over five years provides a degree of certainty in managing cash flow, especially given the volatility in interest rates seen over recent years. The 75% LTV is also noteworthy, as it allows investors to leverage a significant portion of the property value while maintaining some equity buffer. Medium-sized HMOs typically demand more complex management and higher upfront costs than single-let properties, so access to competitive finance can improve overall returns.
This product could be particularly appealing in urban areas where demand for larger HMOs remains strong, driven by rental affordability pressures and the continuing need for flexible housing solutions. However, investors should still factor in the operational challenges of managing seven-plus room HMOs, including compliance with licensing and safety regulations.
Castle Trust’s updated offering signals a cautious but positive step towards supporting the HMO market, which has been a consistent source of rental yield in recent years. Investors looking to scale their portfolios in this niche should consider the balance between financing costs and the potential for stable rental income.
Source: https://www.mortgagestrategy.co.uk/castle-trust-bank-enhances-hmo-range/
