The short answer is yes, in fact you can have as many mortgages as you can afford providing you meet certain criteria laid down by the lenders.
In the mortgage world you can only have one main residence. While some people are fortunate enough to have a second home or holiday home, they will not be classed as a main residence. So, if you are looking for a second mortgage on ‘residential rates’ you may only have one such mortgage.
Residential mortgages are the cheapest mortgage available but will depend on the amount of equity or deposit you have (referred to as LTV or Loan to Value). A lower LTV achieves a lower mortgage rate. LTV’s can go to a maximum of 95% although very few lenders now operate at this level. The amount of mortgage that you can obtain will be dictated by your income
Second Home Holiday Homes
There are very few lenders that operate in this market but it is possible to get a mortgage on a second property or a holiday home, provided it is for your benefit and will not be let out for commercial gain (that includes letting the property when no gain is made because the income does not exceed the cost of the mortgage). The mortgage rate will be a little higher than a residential mortgage. Loan to Value is likely to be capped at about 75%. The mortgage must be deemed affordable by the lender after taking into account any mortgage on your main residence.
Buy to Let Mortgages
The number of buy to let lenders shrank considerably during 20082009 after Bradford & Bingley was sold to Santander following horrendous losses in the sector. Nonetheless, lending criteria is little unchanged although falls in property values and rental income make it harder to secure buy to let mortgages.
You can have many buy to let mortgages as lending is dictated primarily by the level of rental income the property can achieve. You may encounter difficulties if you require mortgages on several properties in the same area because lenders see this as risky should that particular area suffer a downside in ‘rentability’ (if there’s such a word).
You will be required to have a certain level of income in case the property is empty for several months since you will still have to pay the mortgage. Typically £15,000pa, this is not usually a significant hurdle for people investing in this market. If you earn less than £15kpa then seriously consider how you would cope if the property was empty for several months (this caught many people out at the height of the buy to let boom when the recession struck and rents went unpaid).
Essentially then, the rental income must cover the mortgage payments calculated on an interest only basis usually by 125% at a certain rate. The rate will vary between lenders but might be the rate at which the mortgage is charged or a fixed rate (say 6%). You will also have to put down about 25% deposit. If you’re buying properties with good rental income then you could have as many buy to lets as you have 25% deposits.
These tend to be mortgages taken on by companies that buy the premises from which they trade or by investors that purchase properties from which other companies trade.
This is specialised market that is difficult to enter unless you have significant capital of your own to invest. Most commercial mortgages will require a deposit of 40%. Furthermore, you may need to demonstrate your credentials as a commercial landlord and have good levels of income to support the mortgage should you be unable to rent the property – sometimes, finding a tenant for a commercial property can take years.
If you are company buying commercial premises for your own use then you will need a strong set of accounts to demonstrate that the company can afford to continue making the mortgage payments.
Interest rates tend to be about 2-4% above the Bank of England or Bank’s base rate. Fees will be higher (expect 1% – 2%) and you will require more reports are more onerous as you will require more detailed surveys, energy performance certificates, electrical certificates and environmental reports.