We are often asked “Can I have more than one mortgage?”. For most people the answer is yes.
Unsurprisingly, not everyone will qualify for another mortgage.
Taking on another mortgage is not something to be rushed into. It’s another financial commitment that needs to be met each month and depending on how it is set up, it could pose a risk to your own home. What are the rules on multiple mortgages, how many can you have and how do they work?
If you are wondering how many mortgages you can have, there’s no set answer. The total will depend on the type of mortgage and your personal financial circumstances, as we’ll explain in this guide.
Can I have more than one mortgage?
As we mentioned above, it is possible for most people to have more than one mortgage.
You may need another mortgage for many different reasons.
These could include:
- To buy another property for a family member to live in
- To buy an investment property
- To buy a holiday home
- To buy a commercial property
- To invest in a business
- To buy a plot of land or wood
Is it possible to have 3 mortgages?
It is certainly possible to have 3 mortgages.
Maybe you have one on your own home. Then another for a buy to let investment property, and a third for a family holiday home. Obviously you will need to have the income and financial means to be approved for these mortgages and all of the properties will require a decent deposit.
How many residential mortgages can I have?
A residential mortgage is provided so that you may purchase, or remortgage, your own main residence.
So it is not always straightforward to obtain more than one.
They are generally the cheapest form of mortgage, so lenders are wary of people using them to buy properties that are rented out. It is also easier to get a residential mortgage as you need a smaller deposit than you would for a buy to let mortgage.
Residential mortgages are approved based on your ability to afford the repayments from your regular income. So if you had another residential mortgage for a pied-à-terre or holiday home then your disposable income will need to be sufficient.
If you wish to take out a second residential mortgage, you will need to explain to the lender why you need it and declare which of your properties will be your primary residence.
Can you have two mortgages on one property?
Yes, you are able to have two mortgages secured on one property.
If you already have one residential mortgage secured on your home and you want another, then this will be a second charge mortgage, or secured loan. These loans are often used for debt consolidation, home improvements or to cover short term financial commitments.
What can you use a secured loan for?
You can only have one residential mortgage registered against your property at a time, as these require a first charge. The exception to this are regulated loans classed as a ‘second charge’ that are associated with your home. The lenders that offer these usually charge higher interest rates and fees as they are taking a higher risk than your main mortgage provider.
It is even possible, although quite uncommon, to have three mortgages on one property, the last having a third charge.
Legal charges
Each mortgage is secured against your home as a separate’ charge. These are formally registered at Land Registry.
If your home had to be sold to pay your secured debts, your original lender (with the ‘first charge’ mortgage) would have the highest priority claim on the sale proceeds, followed by your second charge lender and then any third charge lender.
Can they be with different lenders?
Yes, in fact secured homeowner loans with a second charge would always be from a different lender. If you borrowed extra money from your main lender this would be called a further advance loan.
You would have your original mortgage with one lender and your second charge mortgage with another lender, resulting in two separate repayments each month.
Do you need life insurance to get a mortgage?
When you’re looking to buy a home or remortgage, one of the most important decisions you need to make is whether or not to take out life insurance.
But do you need life insurance to get a mortgage?
There are plenty of reasons why taking out a policy could be beneficial to you and your family. In this article, we will explore what life insurance is and how it works when applied towards mortgages.
Is there a limit to how many mortgages you can have?
You may be surprised to learn that there is no formal limit to the number of mortgages that a person can have, it just comes down to mortgage affordability.
While a residential mortgage is restricted to just one, or maybe two, investment based mortgages are unrestricted.
You can even have a mixture of mortgages, according to the types of property owned. For example:
How many buy to let mortgages can I have?
There is no overall maximum or limit to the number of buy to let mortgages a person can have. We receive enquiries from clients who own 10, 20 and even over 50 buy to let rental properties.
But there are some different rules that apply when you own multiple BTL properties.
If you own four or more buy to lets you are classed as a buy to let portfolio landlord. This means that the application process is more rigorous and your portfolio will be analysed by the new lender for loan to value, gearing, and interest cover ratio.
In addition to this, many lenders have maximum limits that apply to each customer. This could be a maximum number of mortgages granted, or an overall maximum on the amount of mortgage debt. They don’t want to be too exposed to any one particular borrower.
So landlords with large portfolios will have mortgages spread over a few different lenders.
Portfolio Mortgages
Portfolio mortgages are available to those investors that have four, or more, investment properties. These can be any combination of buy to let, holiday let, serviced accommodation etc.
A portfolio mortgage works by providing a type of umbrella finance that can fund multiple properties. One advantage is the time saved with mortgage admin, as there’s only one lender, one monthly payment and one statement to worry about.
Second charges
It is possible to have a second charge loan against a buy to let property.
So your main buy to let mortgage would have the first charge and the additional secured loan has a second charge.
Mortgage Calculators
Get started with our free and easy to use mortgage calculators.
Bridging loans
Second charge mortgages tend to be setup over medium to long periods, 5-20 years for example and they will certainly have early repayment fees.
If you need access to some money for just a few months then a secured bridging loan could be the answer. Some bridging lenders will be happy taking a second charge on your buy to let, allowing you to raise some extra capital.
Not on the High Street!
The high street lenders can’t help every mortgage customer and they prefer the simple, low-risk ones.
If your situation is a bit different or needs a more personalised solution then our brokers can help.
Expert advice, for all situations.
Second Charge Mortgages
It’s important to get expert advice when taking out a second mortgage as there are a lot of things to consider.
Bridging Loans
The most flexible of secured loans and often misunderstood. Bridge loans can be used in so many different ways and can be arranged super fast.
Complex Mortgages
A complex mortgage could be considered any situation that does not fit with the standard lenders. Typically this would be borrowers who have multiple income streams and/or properties of non-standard construction.
