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        How Many Mortgages Can You Have?

        Need to take out additional residential or investment mortgages? It can be done! Find out the requirements and what you need to do next in our in-depth guide.

        How will you be using the second property?

        No impact on your credit score

        Pete Mugleston

        Author: Pete Mugleston - Mortgage Expert, MD

        Updated: March 09, 2022

        There are several reasons why you might need multiple mortgages. Maybe you’ve decided to dip your toe in the buy-to-let market or are helping a loved one get on the property ladder. Or business is booming and you are now looking to secure a new HQ with  the help of a commercial mortgage.

        In this guide, we’ll look at the different types of mortgages available for additional properties, common lending requirements for each and the potential hiccups you could face when applying.

        Read on for more information or jump straight to a topic on the menu below….

        How many mortgages can one person have?

        There isn’t a legal limit on how many mortgages you can hold in your name. Obviously, the more mortgages you have, the bigger the risk for the lenders involved. This means that when taking out multiple mortgages will need to prove:

        • You can afford to make the payments on all of your mortgage commitments at once
        • What you will be using the property for
        • That it’s an acceptable risk to offer you multiple mortgages

        While there is technically no legal limit to the amount of mortgages you can hold at once, some lenders have their own rules on this. For example, there are buy-to-let mortgage providers that won’t even consider your application if you have a specific number of buy-to-let mortgages with other lenders. This number can be anywhere between two and 20.

        There are also lenders who offer single mortgage deals for multiple properties, known as portfolio mortgage agreements. They are for landlords with at least four properties, and can be beneficial due to their convenience and often cost-effective where rates are concerned too.

        Because some lenders have strict rules around multiple properties and others don’t, the market can be something of a minefield if you need multiple mortgages and don’t know which providers to approach. Being rejected can set your plans back, but a broker who specialises in arranging finance for multiple properties can boost your chances of success, first time.

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        What types of mortgage can you have more than one of?

        If you already own a property, some lenders will consider approving you for the following types of second mortgage or multiple mortgages in these categories…

        Residential mortgages

        It is possible to have more than one residential mortgage, but most mortgage lenders aren’t keen on people having more than two.

        There are generally three circumstances why you might need another mortgage – often called a second mortgage – for an additional property:

        •  A holiday home: A property that you and/or your family only use at certain times during the year.
        •  A second home for commuting purposes: You only want to commute a couple of days a week so split your time between the area you work in and your family home.
        • Helping a friend or relative get on the property ladder: Known as “assisted mortgages” where you effectively act as a guarantor for the dependent.

        You will need to prove precisely why you need a second/additional mortgage and state which property is your “main residence”.  As a word of caution, if you’re considering letting a second property out (even if that’s for the occasional weekend) to residential tenants, you will require a buy-to-let mortgage or consent from your lender.

        Breaking the terms of your residential mortgage could result in an increased interest rate, a fine or, in extreme cases, a demand for your mortgage to be repaid in full. There are occasions where you could request a “consent to let”, where the lender allows you to rent out your property for a short period of time (maybe you’ve been offered a work placement abroad for six months and want to let your property while you’re away) but this is not guaranteed with every lender.

        Buy-to-let mortgages

        It is much easier to secure multiple buy-to-let mortgages than residential loans, if by ‘multiple’ we mean more than two. There is no legal limit to the amount you can take out, although some lenders place their own caps on this and others specialise with landlords with large portfolios.

        There are several factors that lenders will consider before offering you an additional mortgage for a buy-to-let property. Expect them to ask you the following questions…

        • Is this your first investment property?
        • Do you have other investment properties?
        • What type of property is it?
        • Do you have different types of properties in different locations?
        • How large is your portfolio and is it diversified?

        This is because different lenders will have very different lending criteria. Some are happy to lend to first time investors, while others will only lend to experienced landlords. Some lenders won’t lend to landlords who they feel have already taken on too much borrowing and too large a portfolio (capped at £2m for example).

        Some lenders won’t lend if they feel you have too much exposure to a certain type of property or area (for example, some lenders may want to avoid lending against two-bedroom flats in Birmingham city centre, in case this niche takes a particular hit in demand or property value).

        Others may have a policy of not lending against former Ministry of Defence properties or student properties, for example.

        Lenders can be stringent with this criteria, but don’t panic if you think you fall outside of it. By working with a broker, you can boost your chances of finding a flexible mortgage provider.

        Commercial mortgages

        Again, there is no limit on the number of commercial mortgages you can take out, and some lenders offer exclusive deals for borrowers who are purchasing multiple properties.

        The lender will just want to know that you can afford to meet the repayments (whether the property is being used or not) based on an assessment of your operating profits, you have a viable business, and in the case of commercial landlords, you aren’t over-leveraged.

        As this is a highly specific niche of the mortgage industry you will need to find lenders who specialise in the market. Some lenders who offer residential and buy-to-let mortgages don’t actually offer commercial mortgages, due to the different types of risks involved.

        In these circumstances, we would recommend you speak to a mortgage broker who specifically deals with commercial mortgages and has a strong working relationship with lenders who offer them.

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        How a mortgage broker can help you

        Because of the complexities involved in applying for multiple mortgages, it’s highly advisable to speak to a mortgage broker. But make sure you contact a broker that:

        • Specialises in second or multiple mortgage applications
        • Specialises in the EXACT type of second or multiple mortgages you need

        Why is this? Well as you may have already worked out, different lenders have very different lending criteria. Being turned down for a mortgage can affect your credit report and negatively impact your ability to borrow, regardless of what type of property you want to buy.

        An independent mortgage advisor will already know which lenders to approach, based on your needs. For example, someone who is taking on their first investment property will have very different needs and lending risks to a landlord who already has several properties.

        Someone who is looking to buy a property for their children will have very different requirements to someone buying a holiday home.

        Finding a broker with the exact expertise you need is usually the hard part, but we’ve got you covered there. Simply make an enquiry with us and our matching service will pair you with the broker who is best placed to help you secure the mortgages you need.

        Eligibility criteria and deposit requirements

        The exact criteria you need to meet will vary depending on what type of mortgages you’re looking for, but some lender requirements apply across the board. For example…

        • Most lenders will want you to have had a residential mortgage for at least six months before approving you for additional mortgages
        • Deposit requirements for additional mortgages can be stricter. For residential, it’s usually around 20% while buy-to-let and commercial are even high than this
        • Affordability is based on your ability to make the agreed payments on all of your mortgages at once. For buy-to-let, rental income will be factored in and the lender will want the projected rental capital to cover the mortgage payments by at least 25%. For commercial mortgages, affordability is usually based on operating profit and assessed on a case-by-case basis.
        • You will need at least four mortgages to get approved for a portfolio agreement

        When assessing you for additional mortgages, the lender will also carry out the same checks they did for your residential mortgage, so keep in mind that you might need a specialist lender if you have bad credit, are borrowing in later life, or buying ‘non-standard’ properties.

        What kind of interest rates to expect

        Expect to pay a higher interest rate than what you have on your residential mortgage. Second home mortgage rates are, in general, higher than what you’d typically get on a primary home as lenders see them as riskier and need to take steps to safeguard themselves.

        This is even more true of buy-to-let and commercial properties as investment mortgages nearly always have a higher interest rate, even if you have only one of them. Even the lowest rates available for investment mortgages are higher than your average residential mortgage rate.

        There are ways you can avoid being stung by high rates. Firstly, you could consider portfolio mortgage options if you’re in the market for multiple buy to lets, as lenders often incentivise these products by making the rates more attractive than what you get on separate mortgages.

        Secondly, a broker who specialises in multiple mortgages can help you avoid lenders with unfavourable deals and will search the entire market for the best deals that you qualify for.

        Other costs and considerations

        First and foremost, you might need to consider a new insurance policy as standard home insurance won’t cover you if you’re moving into the investment property market. There are also specialist insurance deals available for portfolio landlords.

        Another cost you need to consider when buying additional properties in England or Wales is stamp duty. Additional properties attract a 3% surcharge on top of the standard stamp duty rate. However, you are eligible for a refund if your second home becomes your primary residence and you sell or give away your first property within 3 years of buying your second home.

        Get matched with a broker who specialises in multiple mortgages

        It can be more difficult and riskier to take out multiple mortgages, but there’s a way you can safeguard yourself and boost your chances of a successful outcome. By applying through a broker who specialises in arranging multiple mortgages, you can avoid any pitfalls and potentially save time, money and marks on your credit report in the long run.

        We work with brokers who are experts in second homes, buy-to-let portfolios and commercial mortgages, and can handpick the right one for you for free. Our broker-matching service will quickly assess your needs and circumstances to pair you with your ideal mortgage advisor.

        Get in touch on 0808 189 0463 or make an enquiry and we’ll set up a free, no-obligation chat between you and a broker who specialises in arranging multiple mortgages today.

        FAQs

        If you’re a buy-to-let investor or a career landlord, it can be. By taking out multiple mortgages, you’d be spreading the risk across several properties, so if one was to hit a void period you’d have others to fall back on and still have a means of generating rental income.

        Property portfolios, however, aren’t for everyone. If, for example, you’re a pensioner who wants to use a buy-to-let mortgage as a way to generate retirement income, one property might suffice and it could even be left to your loved ones without a mortgage attached when you pass away.

        As you can see from the above example scenarios, there is no ‘one-size-fits-all’ answer to this question and it’s impossible to offer a solution without a thorough assessment of the aspiring investor’s needs, their circumstances, and the current market conditions.

        Needless to say, you should always seek professional advice before investing in property.

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        Pete Mugleston

        Pete Mugleston

        Mortgage Expert, MD

        About the author

        Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

        Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

        FCA Disclaimer

        *Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

        Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.