THE PROPERTY FILTER TAKE
Castle Trust Bank has added a medium HMO price category for seven to 10 rooms: a five-year fix at 5.99% at up to 75% LTV (Mortgage Solutions, 9 September 2026), a rate that may have moved since.
In England and Wales, an HMO let to 5 or more people forming more than 1 household needs a mandatory licence (GOV.UK), and an unlicensed HMO can mean an unlimited fine.
Before applying, you may wish to check your licence status and room count, and consider asking your broker when the 1% exit fee applies.
Castle Trust Bank now prices medium HMOs (houses in multiple occupation) of seven to 10 rooms as their own category. The five-year fixed rate is 5.99% at up to 75% LTV (loan to value). Mortgage Solutions reported the change on 9 September 2026, and rates may have moved since. The rate is only half the file, though. A seven-room HMO also sits inside a licensing regime.
What does the medium HMO category offer?
The tier sits on TermTen, the bank's BTL (buy-to-let) product, which combines a 10-year term with a five-year fixed rate and interest-only payments (Mortgage Solutions, 9 September 2026). Interest-only means the monthly payment covers interest, and the loan itself is repaid at the end. Loans run from £200,000 to £5m, with a 3% arrangement fee and a 1% exit fee. None of the September 2026 coverage says when the exit fee applies. Older TermTen coverage described it as a redemption fee (Mortgage Solutions, November 2022), so consider asking your broker whether that still holds.
According to The Intermediary (September 2026), the new tier sits between small HMOs of up to six rooms and large HMOs of 11 to 15 rooms. Portfolio and first-time landlords, limited companies, individuals, expats and foreign nationals can apply. The lending criteria attach conditions: expats must own a UK property, and foreign nationals need proven UK mortgage conduct. Loans over £5m are considered on individually priced terms.
"An HMO with seven rooms can present a different lending requirement from one with 15 rooms," said Anna Lewis, commercial director at Castle Trust Bank (Mortgage Solutions, 9 September 2026).
On an illustrative £500,000 loan, interest-only at 5.99% costs £2,495.83 a month (£500,000 x 5.99% ÷ 12). The 3% arrangement fee on that loan is a separate one-off £15,000. Castle Trust's products page says product fees can be added to the loan, which raises the balance that interest is charged on.
Does a seven to 10 room HMO need a licence?
Under GOV.UK's HMO licensing guidance, a licence is mandatory for a large HMO in England or Wales. That applies when a property is rented to 5 or more people forming more than 1 household, sharing a toilet, bathroom or kitchen, and at least 1 tenant pays rent. The guidance covers England and Wales only.
Room count and head count are not the same test. But if each of seven rooms is let to a separate tenant, that is seven people, above the five-person line. Smaller HMOs may still need a licence depending on the council area, according to GOV.UK.
GOV.UK says renting out an unlicensed HMO can bring an unlimited fine. A licence lasts a maximum of 5 years, and each HMO needs its own. Our free HMO valuation calculator gives a starting view of what an HMO is worth before you borrow against it.
None of the published coverage says whether Castle Trust asks to see a licence. That is a question to put to the lender through your broker.
What should an HMO borrower check before applying?
Castle Trust's lending criteria, last updated 26 February 2026 and so before the medium tier launched, set the rental test for HMOs at the pay rate at 145%. That is the ICR (interest coverage ratio): rent must be at least 145% of the monthly interest at the product's pay rate. On the £500,000 example above, that is at least £3,618.96 a month. You can run your own figures through our free stress test calculator.
The same document says applications are only acceptable for properties in England and Wales. It also requires an AST (assured shorthold tenancy) of between 6 and 12 months, with longer terms by negotiation. Castle Trust's products page, read on 23 September 2026, lists a maximum of 77% LTV gross across TermTen, but it does not list the medium HMO rate.
You may wish to confirm your licence status and exact room count before applying, since the room band decides the price category. Our negotiation and finance guides cover how to brief a broker on a specialist case like this.
Consider asking your broker when the 1% exit fee is charged, and whether adding fees to the loan changes the rental test. How a medium HMO fits a wider hold plan is covered in our property investment strategies hub.
Key takeaways
Castle Trust Bank's medium HMO category covers seven to 10 rooms, at a five-year fixed rate of 5.99% up to 75% LTV (Mortgage Solutions, 9 September 2026); the rate may have moved since.
TermTen loans for the tier run from £200,000 to £5m per the 9 September coverage, with larger loans individually priced, a 3% arrangement fee and a 1% exit fee, on a 10-year interest-only term.
On an illustrative £500,000 loan, interest-only at 5.99% costs £2,495.83 a month, plus a one-off 3% arrangement fee of £15,000.
In England and Wales, an HMO rented to 5 or more people forming more than 1 household needs a mandatory licence (GOV.UK).
Castle Trust's criteria, last updated 26 February 2026, test HMO rent at the pay rate at 145% and accept properties in England and Wales only.
Frequently asked questions
What is Castle Trust Bank's medium HMO rate?
What fees apply to the medium HMO product?
Does a seven-room HMO need a licence in England?
Does Castle Trust require an HMO licence to lend?
