Introduction
This guide covers everything you need to know about Paragon HMO mortgages for landlords and property investors. Whether you are a professional landlord or first time property investor, this page is designed to help you understand how Paragon HMO mortgages can support your goals of maximising rental yields and growing your property portfolio.
Paragon HMO mortgages matter because they are tailored for complex property types such as Houses in Multiple Occupation (HMOs) and multi-unit blocks (MUBs), offering solutions that mainstream lenders often cannot provide.
HMOs generally offer higher rental yields compared to single-let properties, but they also come with higher risks and more complex management requirements. This guide will walk you through Paragon’s criteria, product features, and the application process, ensuring you have the information needed to make informed decisions about your property investments.
Key Takeaways
- Paragon Bank is one of the UK’s leading specialist lenders for houses in multiple occupation and multi-unit blocks, with criteria designed specifically for professional landlords and portfolio investors.
- Fox Davidson are specialist HMO mortgage brokers who regularly arrange Paragon HMO mortgages alongside other specialist lenders, including for complex, high-value portfolios from £150,000 upwards.
- Paragon’s HMO products typically support up to 75% LTV, portfolio landlords with up to 15 properties under the streamlined process, limited company landlords and SPVs, and more complex multi-let properties.
- Paragon has extended its simplified buy to let application process to cover houses in multiple occupation and MUBs, reducing paperwork and speeding up offers when submitted via experienced brokers like Fox Davidson.
- Paragon’s streamlined HMO and MUB application process was launched in the summer, highlighting its recent introduction and relevance for landlords focused on growth and efficiency.
- Contact Fox Davidson for a free, no-obligation review of your HMO portfolio and tailored illustration using Paragon and alternative lender options.
What is a Paragon HMO Mortgage?
A Paragon HMO mortgage is a specialist buy to let product designed specifically for houses in multiple occupation and multi-unit blocks, aimed at professional and portfolio landlords seeking to maximise returns from room-by-room or unit-by-unit letting strategies.
Paragon Bank, founded in 1985, has established itself as a major force in UK property finance. The bank manages over £16 billion of assets and serves more than 340,000 customers, with a particularly strong focus on the private rented sector. P
Paragon is proud of its long-standing experience and leadership in complex buy-to-let lending, especially for HMOs and MUBs. This heritage means Paragon understands the more complex property requirements that come with HMO and multi-let investments.
Definition of Multi-Unit Blocks (MUBs): Multi-unit blocks (MUBs) are properties containing multiple self-contained units under a single freehold. Paragon offers mortgage products suitable for a range of property types, including single self-contained units, HMOs, and multi-unit blocks. Fox Davidson are a specialist MUFB mortgage broker.
Why HMOs? Houses in Multiple Occupation (HMOs) are generally considered to have higher rental yields compared to single-let properties, but carry higher risks. This makes them attractive for landlords seeking to maximise returns, provided they are prepared for the additional management and compliance requirements.
- Paragon’s HMO range covers small and large HMOs, student lets, professional sharer houses, and multi-unit blocks (MUBs/MUFBs) under a single freehold.
- Products are available for individual borrowers and limited company structures, including SPVs established specifically for property investment.
- The lender has built its proposition around serving landlords who prefer specialist assets over single self-contained properties.
- Paragon’s underwriting expertise means they can consider property types that mainstream high street lenders typically decline.
Fox Davidson translates Paragon’s criteria into real-world funding solutions for investors across England and Wales. Whether you’re financing a complex, high-yield asset or structuring a larger loan for portfolio expansion enabling landlords to grow efficiently, the brokerage’s market access ensures you’re matched with the most suitable lender for your circumstances.
Continue reading to learn about Paragon’s lending criteria and how they apply to your property investment strategy.
Paragon HMO Lending Criteria Overview
Paragon’s lending criteria are designed to support professional landlords and investors. Detailed lending criteria regularly change, so it’s important to reference the latest Paragon product guide and underwriting bulletins for exact numbers and stress rates. The following provides indicative guidance on what borrowers can typically expect.
Paragon HMO Mortgage Criteria at a Glance
Criteria | Typical Requirement |
|---|---|
Maximum Loan-to-Value (LTV) | Up to 75% |
Minimum Experience | Three years as a landlord (some options for less experienced investors) |
Minimum Property Value | £100,000 (up to 10 rooms); £150,000 (up to 20 rooms) |
Maximum Number of Rooms | Up to 20 |
Interest Cover Ratio (ICR) | 130%–145% (varies by tax status and property type) |
Licensing Requirements | Proof of appropriate licensing and compliance for 5+ tenants |
Eligible Property Types | HMOs, multi-unit blocks, single self-contained units; EPC rating E minimum |
Minimum Loan Size | £100,000 (core client base from £250,000 upwards) |
Maximum Aggregate Borrowing | Up to £2 million (streamlined), higher possible with full underwriting |
Affordability Assessment | Based on potential rental yield, not just personal income |
Loan-to-Value (LTV) Limits
- Up to 75% LTV for HMOs and MUBs is the standard maximum, with lower caps possible for larger loans or specialist assets above £1 million in value.
Minimum Loan Sizes
- Paragon typically starts from around £100,000, though Fox Davidson’s core client base usually borrows from £250,000 upwards across single properties and portfolios.
Aggregate Borrowing Limits
- Up to £2 million exposure with Paragon is available for streamlined applications, with potential for higher exposure via full underwriting assessment.
Experience Requirements
- Paragon usually prefers experienced landlords (minimum three years), though they can accommodate those building their portfolios. The enhanced process is only applicable to portfolio landlords with up to 15 mortgaged properties; additional requirements may be applicable if you exceed this threshold or if other specific criteria are met.
Interest Cover Ratios (ICRs)
- Rental coverage is calculated at a stressed rate above the pay rate, often with different tests for limited company borrowers versus individual applicants. ICRs of 130%–145% are typical for HMO lending.
Fox Davidson checks up-to-date criteria before every submission, ensuring your application aligns with Paragon’s current requirements and avoiding wasted time on cases that don’t fit the lender’s appetite.
Next, let’s look at the types of properties and tenants Paragon will consider for HMO lending.
Accepted Properties and Tenant Types for Paragon HMOs
Paragon identifies an HMO as a property which is rented out by at least three people who are not from one household (e.g. a family) but share facilities such as the bathroom and kitchen. For properties with five or more tenants forming more than one household, Paragon HMO mortgages may require proof of appropriate licensing and compliance with safety regulations, including fire safety and minimum room sizes.
Property Types
- Small and large HMOs: Paragon accepts both categories, including professional sharer houses and student HMOs, subject to local Article 4 rules and mandatory licensing where required.
- Multi-unit properties: The lender finances buildings under one freehold, often called MUBs or MUFBs, such as premises split into single self-contained flats on one title.
- Group of properties: Paragon supports landlords with portfolios or groups of properties, including HMOs and MUBs, making it easier for property investors with multiple assets to access streamlined lending.
- Freehold blocks with sold units: Paragon can consider freehold blocks where some single self-contained units have been sold off on long leases, often allowing lending when no more than around 50% of the units have been sold.
Tenant Profiles
- A variety of tenant types are acceptable—students, working professionals, and mixed households—provided tenancy agreements and local regulations are compliant.
Licensing and Tenancy Agreements
- Individual ASTs and room-by-room licensing requirements are key underwriting considerations. Fox Davidson verifies these against Paragon’s latest guidance before submission.
Real-world examples include:
- A six-bed student HMO in Bristol requiring mandatory licensing and Article 4 compliance.
- A 12-unit self-contained flat block in Manchester under a single freehold.
- A professional sharer house in Leeds with five tenants on individual ASTs.
With a clear understanding of eligible properties and tenants, let’s explore Paragon’s streamlined application process for HMO and MUB mortgages.
Paragon’s Streamlined HMO and MUB Application Process
Paragon has expanded its simplified buy to let application journey from standard BTL into occupation HMOs and multi-unit blocks, creating a faster and easier application journey for qualifying applications, especially for landlords with complex property types. A recent enhancement to the application process expands eligibility and streamlines procedures for landlords investing in HMOs and MUBs.
- The enhanced process is designed for individual and limited company landlords with up to 15 mortgaged properties in total, covering single units, HMOs and MUBs.
- Paragon’s origination platform pre-populates data from trusted sources (Companies House, credit data, property databases), reducing documents brokers and clients must supply.
- Qualifying applications benefit from Paragon carrying out the valuation directly and using standardised forms, cutting back-and-forth and speeding up decisions.
- The simpler process means borrowers hold fewer delays and receive offers more quickly than traditional, document-heavy submissions.
This enhancement means landlords with different portfolio sizes and property types can now access a more efficient process tailored to their needs.
Fox Davidson’s HMO team uses this platform daily, structuring portfolios so clients can maximise use of the streamlined route while still accessing bespoke terms for larger or more complex cases. As Louisa Sedgwick, Managing Director of Mortgages at Paragon, has noted, extending this enhanced process to HMOs and MUBs was a natural next step in supporting professional landlords.
Now that you know how the application process works, let’s review the product types, rates, and structures available from Paragon.
Paragon HMO Products, Rates and Structures
Specific rates change weekly, so it’s more useful to understand the product structures available rather than quoting precise pricing that will quickly date.
- Product types: Paragon offers both fixed-rate and base-rate tracker HMO mortgages, typically on two- and five-year terms, up to around 75% LTV for qualifying properties.
- Base rate trackers: Paragon has launched base rate trackers for HMOs, multi-unit blocks and single self-contained units, sometimes with pricing from base rate plus a margin (historically from around base +1.6% on five-year trackers in past ranges).
- No early repayment charges: Certain tracker products may have no ERCs, giving landlords flexibility to refinance or sell units without penalty—a key advantage for portfolio restructuring.
- Fee options: Multiple fee structures are usually available (choices around 0.75%, 1% or 1.5% arrangement fees), allowing investors to balance upfront cost against ongoing rate. Landlords can choose the fee option that best suits their needs, providing flexibility to tailor the mortgage to their individual circumstances.
- HMO-specific adjustments: Paragon has historically adjusted initial rates and LTV tiers specifically for multiple occupation HMOs, reflecting their higher yields and more complex management requirements.
Fox Davidson can compare Paragon’s terms with other specialist HMO lenders to ensure you’re accessing the most competitive products for your circumstances.
Next, let’s examine Paragon’s position in the specialist HMO and MUB market and why it’s a preferred choice for many landlords.
Paragon’s Position in the Specialist HMO and MUB Market
Paragon stands as one of the UK’s best-known specialist buy to let lenders for complex properties, including HMOs, MUBs and portfolio lending. The bank has made supporting professional landlords a core part of its proposition.
- Paragon’s range spans single self-contained units, small HMOs, large licensed HMOs, and blocks of flats under a single freehold, allowing landlords to finance mixed portfolios with one lender.
- The bank’s focus on professional, large-scale landlords and limited company structures aligns well with Fox Davidson’s client base of serious investors and developers.
- Enhanced processes, higher aggregate lending limits and products tailored to complex letting arrangements make Paragon a frequent recommendation for high-yield and specialist assets.
- Many mainstream high street lenders will not touch larger HMOs or multi-unit blocks at all, making Paragon’s expertise increasingly attractive for portfolio growth.
Over the years, Paragon has continually expanded and improved its HMO lending processes to better serve landlords. The evolution of Paragon’s HMO lending demonstrates a clear commitment to serving landlords who operate at scale. Their willingness to consider property types other lenders decline, combined with processes designed for efficiency, positions them as a natural choice for serious HMO investors.
If you’re considering a Paragon HMO mortgage, the next section explains how Fox Davidson can help you secure the right finance or explore alternatives.
How Fox Davidson Secures Paragon HMO Mortgages (and Alternatives)
Fox Davidson is a specialist buy to let property finance brokerage, regularly placing HMO finance with Paragon and other niche lenders across the market.
Initial Consultation
- Fox Davidson begins with a portfolio and tax-structure review, checking Paragon’s latest criteria before modelling loan structures (interest-only vs. capital-and-interest) based on your yield and exit strategy.
Borrower Structures
- The team works with limited company, LLP and personal borrowers, helping clients decide whether an SPV or trading company structure best fits Paragon’s underwriting approach.
Alternative Lenders
- Where a case does not fit Paragon’s policy, for example, very high LTV requirements, non-standard tenants, or unusually large developments, Fox Davidson can access alternative HMO lenders offering bridging, development finance or bespoke term loans.
Complex Cases
- Fox Davidson has particular experience handling freehold blocks with some units sold on long leases, complex title arrangements and multi-property refinancing across portfolios.
Readers with loans from £150,000 upward should contact Fox Davidson for a free, no-obligation discussion to see whether a Paragon product or another specialist lender is most suitable for their requirements.
To see how these solutions work in practice, let’s look at some typical scenarios where Paragon HMO mortgages are a strong fit.
Typical Scenarios Where Paragon HMO Mortgages Work Well
The following examples demonstrate situations where Fox Davidson might place an HMO or MUB deal with Paragon, showcasing how deals are structured in practice.
- Refinancing a fully-let student HMO:A landlord owns a six-bed licensed student HMO in a university city such as Bristol, Nottingham or Manchester. The property is fully let with strong rental yields, and the landlord wants to release equity for the next purchase. Paragon’s yield-based valuation approach can recognise the income potential, while their 75% LTV allows meaningful capital release. Fox Davidson structures the refinance to support ongoing portfolio expansion.
- Acquiring a mixed-use freehold:A client identifies a ground-floor commercial unit with four self-contained flats above, all under one freehold. The flats are let on ASTs and the buyer requires one lender across the whole block. Fox Davidson checks whether Paragon’s current appetite covers mixed-use assets or if an alternative specialist lender offers a better fit, ensuring the deal progresses smoothly.
- Portfolio consolidation into a limited company:A landlord with 10 properties, including several HMOs and single lets, decides to restructure into a limited company for tax efficiency. Fox Davidson arranges refinancing onto Paragon’s limited company HMO products using the streamlined application process, consolidating the portfolio under one lending relationship while maximising the benefits of the enhanced process.
- Exiting bridging finance:Following an HMO conversion, a developer holds short-term refurbishment or bridging finance that needs replacing with a long-term mortgage. Once the property is fully let and licensed, Fox Davidson arranges exit onto a Paragon HMO mortgage, converting expensive bridging into sustainable long-term debt with competitive rates.
If you’re ready to apply, the next section outlines the step-by-step process of working with Fox Davidson on your Paragon HMO application.
Working with Fox Davidson on Your Paragon HMO Application
This section provides a practical “what happens next” guide for landlords interested in Paragon HMO finance.
- Discovery call: Fox Davidson assesses your experience, portfolio size, tax position and target properties, including any licensing or planning issues that could affect the application.
- Document gathering: Information typically required includes your property schedule, tenancy details, business bank statements, company accounts, personal income evidence, property details and licences.
- Case packaging: Fox Davidson structures the submission for Paragon underwriting, pre-empting questions around valuation, HMO standards, occupancy and rental demand to keep the process smooth.
- Ongoing communication: The team tracks valuation dates, underwriter queries and offer timelines, updating you from application through to completion.
- Future planning: Fox Davidson reviews refinancing or portfolio reshaping opportunities, helping you decide when to move from a tracker to a fixed rate or vice versa as Paragon’s product slate changes.
The added support from an experienced broker makes the difference between a straightforward process and one plagued by delays and rework.
For further clarity, see the answers to frequently asked questions about Paragon HMO mortgages below.
Frequently Asked Questions About Paragon HMO Mortgages
Can I use a limited company (SPV) to apply for a Paragon HMO mortgage through Fox Davidson?Yes, Paragon is comfortable with limited company and SPV structures for HMO and MUFB lending, and Fox Davidson commonly arranges loans this way. SPV company SIC codes, director guarantees and portfolio exposure will be checked against current Paragon policy. This structure can offer tax advantages and is a natural choice for serious portfolio investors.
Does Paragon lend on large HMOs and multi-unit blocks nationwide?Paragon is active across much of England and Wales and can consider both larger HMOs and multi-unit freehold blocks, subject to property type, location, valuation and licensing. Scotland and Northern Ireland policies may differ or lending may not be available. Fox Davidson provides case-specific guidance based on your property location.
How many properties do I need to qualify as a ‘portfolio landlord’ for Paragon?Under UK regulation, a portfolio landlord is generally someone with four or more mortgaged buy to let properties. Paragon’s streamlined process is typically available to landlords with up to 15 properties. Fox Davidson confirms how current rules apply to each case and whether full portfolio underwriting is required.
Can I remortgage from a bridging or development loan onto a Paragon HMO product?Yes, subject to valuation, rental coverage and licensing being in place. Fox Davidson frequently arranges an exit from short-term refurbishment or conversion finance into a long-term Paragon HMO mortgage once works are complete and the property is income-producing.
Is Paragon always the best lender for HMOs, or should I consider others?While Paragon is a strong specialist option, the “best” lender depends on LTV, property type, experience, portfolio size and income profile. Fox Davidson compares Paragon’s terms with other HMO lenders across the whole market, including TMW, Shawbrook, Precise Mortgages and others and recommends the most suitable solution rather than defaulting to a single provider.
