Castle Trust Bank has widened its buy-to-let offering by introducing a new price category specifically for medium-sized HMOs, defined as properties with seven to 10 rooms. The bank now offers a five-year fixed rate of 5.99% at up to 75% loan-to-value, with minimum loans starting at £200,000. This move targets a segment of the HMO market that often faces higher financing costs and stricter criteria.
For UK property investors, this is a notable development. Medium HMOs typically require more capital and management complexity than smaller HMOs or single-let buy-to-lets, so lenders have historically been cautious. Castle Trust Bank’s pricing at just under 6% fixed for five years is competitive given current market conditions, where rates on buy-to-let mortgages frequently exceed this level, especially for larger HMOs.
The 75% LTV is also relatively generous. Many lenders reduce LTV for HMOs due to perceived risk, so this level of leverage could improve cash flow and returns for investors able to meet the loan size threshold. The £200,000 minimum loan amount may limit access to smaller-scale investors but aligns with the typical purchase price of medium HMOs in many UK cities.
Investors should weigh the fixed rate against the broader interest rate environment and their exit strategy. Given the five-year term, this product suits those looking for medium-term certainty on repayments. The enhanced product offering reflects Castle Trust Bank’s continued focus on specialist BTL lending, particularly in the HMO sector which remains a key growth area for investors seeking higher yields.
Source: Mortgage Strategy
