Mortgage Broker Tools (MBT) has found that thorough research is even more important for investors in HMOs and holiday lets.

MBT’s latest Affordability Index analysed real cases processed through the research platform and found that, over the course of 2021 so far, 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 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. 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 ONS.

For holiday lets, the average maximum loan available so far this year has been £401,384, while the average minimum loan is £164,119. This is a difference of £237,265.

Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “Mortgage Broker Tools offers by far the most comprehensive buy-to-let affordability results of any provider in the market and we have already used the immense volume of data processed through the platform to show that the right choice of buy-to-let lenders is even more crucial than in the Residential market. Now, we can show that choosing the right lender makes a bigger difference on specialist buy-to-let 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 buy-to-let 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.”