MUFB mortgages

MUFB mortgage criteria and lending

MUFB mortgage criteria vary between specialist lenders, so the case is placed with the desk whose lending criteria fit the block. Lenders look at the number of units in the multi unit freehold block, whether each unit is genuinely self-contained, the total rental income against their stress test, and how the building is held on its single freehold title. Most lenders will fund a small block of a few units, while a larger block of six or more units, or a block that would be valued on a commercial basis, sits with a smaller pool of lenders. They will want the units to have their own facilities and their own tenancies, usually an assured shorthold tenancy per unit, and they will check the EPC and the condition of the block. Many MUFB lenders lend to a limited company or SPV as well as to individuals, with the directors giving personal guarantees. We know which lenders fund larger freehold blocks, which accept company borrowers and which will lend on a conversion, and we place the case accordingly. All criteria are indicative, vary by lender, borrower and property, and are not an offer of finance.

How much can you borrow on a MUFB mortgage?

A MUFB mortgage is typically arranged up to around 75 percent loan to value, so the deposit is indicatively 25 percent of the block's value, with the exact figure set by the lender, the number of units and the total rental income. The loan is sized on the interest cover ratio the combined rent across the units gives against the lender's stress rate, and because a multi unit freehold block usually earns more per building than a single let, a well tenanted block often supports the borrowing comfortably. The valuation matters: a smaller block is often valued on a bricks and mortar basis close to the sum of the flats, while a larger freehold block can be valued on an investment or commercial basis on its rental income, which changes both the value and the achievable loan. Where the rent is tight relative to the loan, a lender may reduce the advance or look for top slicing. We model the interest cover on the buy to let mortgage calculator before approaching lenders, so the MUFB mortgage goes to market at a level that will fund. The figures are illustrative, vary by lender and property, and are not an offer of finance.

MUFB mortgage rates and valuation

MUFB mortgage rates track the specialist buy to let market and depend on the loan to value, the interest cover ratio the block's rent supports, the number of units and whether the borrower is an individual or a limited company. Rates on a multi unit freehold block usually sit a little above a standard single buy to let, reflecting the specialist underwriting and the smaller pool of lenders, though a strong, well tenanted block prices competitively. Expect a lender arrangement fee, often a percentage of the loan on specialist products, a valuation fee that reflects the block inspection, and legal costs. The valuation basis, bricks and mortar or investment value, is the single biggest variable on a MUFB, which is why the right lender matters. Rates are commonly fixed over two or five years with an early repayment charge inside the fixed period. We disclose our broker fee in writing and quote current indicative MUFB mortgage rates and the all in cost rather than headline figures, and they are not an offer of finance.

MUFB vs HMO: what is the difference?

The difference between a MUFB and an HMO is how the accommodation is arranged and let. A multi unit freehold block is several self-contained flats, each with its own kitchen, bathroom and tenancy, held together on one freehold title. A house in multiple occupation is a single dwelling let room by room to tenants who share the kitchen or bathroom. That distinction changes the lending: MUFBs and HMOs are underwritten by different lenders, valued on a different basis and, where a licence is involved, licensed differently, since HMO licensing does not apply to a block of self-contained flats in the same way. Some buildings blur the line, and lenders care a great deal about which side a property falls, so getting the classification right before applying avoids a declined valuation. We arrange both MUFB mortgages and HMO mortgages, alongside semi commercial mortgages and portfolio mortgages, and we make sure the case goes to a lender that funds the property as it actually is. Where a case would be a regulated mortgage contract or a consumer buy to let, we refer it to an authorised firm.