How many mortgages can I have?
There are many would-be buyers interested in purchasing an additional property and fortunately for them, it is possible to have more than one mortgage. There are specific requirements, however, and not just anybody can qualify for a second mortgage.
So if you’re wondering how many mortgages you can have, you’ve come to the right place. At Loan Corp, we pride ourselves on providing buyers with all the information they need to make the wisest mortgage decisions. This guide has all the mortgage advice you need to make your next purchase.
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Getting multiple mortgages
This guide tells you everything you need to know about mortgages. Someone can have as many mortgages as they want (although property buyers should avoid multiple mortgages) as long as they meet specific criteria.
Mortgage providers don’t hand out mortgages without scrutinising applications. You need to have a good reason why you need more than one mortgage. Also, just because you can get an additional mortgage (or mortgages), it doesn’t mean you should.
The cost of multiple mortgages can accumulate very quickly, so make sure your finances are in order and that you can cope with another mortgage before making any concrete decisions.
There is no limit
No legal limit exists on how many mortgages a person can hold in their name. However, the more mortgages you have under your name, the higher the risk for the mortgage providers lending you money.
You must clarify several things before taking out multiple residential mortgages. Lenders want to know the following:
- How you will use the property;
- If you can afford every payment for all of the mortgages at once;
- And that the risk of granting a loan is reasonable.
Although there is no official limit on the number of mortgages you can have, some second home mortgage lenders have their own stringent rules and company laws, and may refuse to give you a second mortgage.
As some lenders are relatively relaxed about requirements and others have strict rules and prerequisites, finding the right lender who allows more than one mortgage can be challenging – but not impossible.
Bear in mind that this article doesn’t constitute financial advice.
Different types of mortgages
There are various types of mortgages, and all have their own rules and requirements.
Buy-to-let mortgage
The number of buy-to-let mortgages a person can have is unlimited. Nevertheless, some lenders have a maximum amount they will grant to a single individual to minimise the risk. However, some people merely take out multiple buy-to-let mortgages from a number of different lenders instead of going through one mortgage lender.
It is easier to get multiple buy-to-let mortgages than to get residential loans. However, not every lender is the same, and there are several factors that lenders will first assess before they even consider offering you another mortgage.
If you want additional buy-to-let mortgages, expect the lender to ask you the following:
- What other investment properties do you have?
- Is this your very first investment property?
- What type of property do you have?
- How big is your portfolio?
- Is your portfolio diversified?
- Do you have different properties in different locations?
Every lender you look at will have their own set of criteria for lending. Some only lend to the experienced, while others will have no problem lending to first-time investors. Some may not lend to people they feel are already borrowing too much, and some won’t if they believe you have too much exposure to a specific area or property.
Some lenders may even have policies against lending student properties or former Ministry of Defence properties. It all comes down to the lender: some may be stringent with their criteria, while others aren’t. Mortgage brokers can help you find a great mortgage provider.
The best lenders for buy-to-let mortgages are Lloyds Bank and Natwest.
Residential mortgages
When it comes to residential mortgages, it is possible to have more than one; however, you will need to nominate one as your primary residence. In general, getting a second home mortgage is relatively easy, but you will likely struggle with getting a third or fourth residential mortgage.
Most lenders limit how many residential mortgages a person can have because of illegal sub-letting. This is mainly because getting a residential mortgage is much easier since the deposit is much smaller.
Again, you will need to give substantial reasoning for why you would like to get a second mortgage. Getting another residential mortgage is easy, but few mortgage providers lending to people will be open to more than two mortgages.
You may need to take out another mortgage for several reasons, such as purchasing a second home to reduce excessive commuting time for work. Some people get a second home when they commute a few days a week and want to split their time between work and home life.
Another case is when people want a holiday home, which is another property that can be used by you or family members periodically throughout the year. Some people opt for assisted mortgages, where they act as a guarantor for the dependent when helping a friend or family climb onto the property ladder.
No matter the reasoning, you must prove why you need an additional mortgage and specify which of your properties is your primary residence. You will need to stick to the terms of your residential mortgage, as breaking them could result in a fine, increased interest rates, or your whole mortgage needing to be repaid in full (this is the worst-case scenario).
Commercial mortgages
Commercial mortgages are similar to buy-to-let mortgages as there is technically no limit to how many you can have. Some investors often choose to invest purely in commercial properties.
Getting approved for multiple commercial mortgages is usually very easy, and you likely won’t encounter any problems. However, you must meet the commercial lender’s criteria to qualify.
Commercial mortgages generally require a 25% deposit, and any additional mortgage will likely need a higher deposit. Deposits can be as high as 35% or more.
Limited companies typically own numerous commercial properties throughout a region or the entire country, which allows them to have several branches.
Again, there is no restriction on how many commercial mortgages you can get. Some lenders even provide special offers to customers buying several properties as long as they know that the customer can afford the repayments.
Commercial mortgages are very specific, and it can take some time to find a lender specialising in this market. We highly recommend looking at Allica Bank or Nationwide commercial mortgage: two excellent lenders.
Some requirements for acquiring many mortgages
There will always be specific criteria you need to meet, depending on the type of mortgage you want.
- Lenders will usually want you to have had your residential mortgage for at least six months before they approve any additional mortgage applications.
- Lenders will always assess affordability based on your ability to make all payments on time and all at once. Your rental income will be considered for buy-to-let mortgages, and the lender will request that the projected rental capital covers the mortgage payments.
- For a commercial mortgage, affordability is assessed on a case-by-case basis and is officially based on operating profit.
- Deposits are higher for additional mortgages.
- You must have at least four mortgages to get approved for a portfolio agreement.
What to consider
Even if you have one mortgage, there are numerous financial risks: ensure you consider the potential issues of having multiple mortgages. Before making any final decisions, assess whether having more than one mortgage is worth the risk.
So, in theory, you can have more than one mortgage, but this doesn’t necessarily mean you can manage it in practice.
Before finalising plans, consider these factors:
- Is your credit score good? Having multiple mortgages might put someone with weak credit in a precarious situation. For instance, not making mortgage payments may lead to the house being repossessed, which may further harm your credit score.
- Can you afford to have more than one mortgage? Although lenders may run affordability checks before approving you, it will be your duty to pay off two mortgages.
- Can you justify all of your reasons for having multiple mortgages? It’s fairly typical to have a second house or an investment portfolio. Nevertheless, it might not be worthwhile to purchase a house you won’t use very much.
- Do you have any current debts? It’s rarely a good idea to be in heavy debt. Remember that you will eventually have to pay off each mortgage, so don’t borrow more than you can afford.
- Do you have the time and energy to look after multiple properties? Even though keeping one property can be challenging, maintaining multiple properties is significantly more difficult. You must be ready for the additional work required to manage an investment portfolio, which takes time, money, and management.
Although there is risk involved in owning multiple properties, it can also be a brilliant investment decision. If you are smart and can afford to do it, you could easily receive a rental income from one of your properties and benefit from increasing property prices.
Final thoughts on 2nd mortgages
We hope this article has answered the question: how many mortgages can I have? In theory, someone can have however many mortgages they need or want. However, this depends on your circumstances and the various lenders’ rules and requirements.
You can easily get more than one mortgage if you provide enough proof and solid reasoning to show you are low risk. Luckily there are many outstanding lenders in the UK, and you can easily find one suitable for you.
Contact us below for multiple mortgage applications to speed up the process and increase your chances.