Can I Have 2 or more Mortgages?
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 2008\2009 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
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
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.