Last updated: 23/07/2020 | Estimated Reading Time: 3 minutes
Whether you want to buy another property for a family member to live in, or to let out to supplement your income, there are a number of reasons why you might require a second or even third mortgage. And luckily, there’s nothing stopping you doing so – you are, at least in theory, allowed to have as many mortgages as you want, it’s simply up to the lender as to what they’ll offer you.
In This Guide:
- Multiple buy to let mortgages
- Main residence and multiple mortgages
- Getting approved for extra mortgages - affordability
- Compare mortgages online
Multiple buy to let mortgages
Many landlords will want to let out multiple properties and will require multiple buy to let mortgages in order to do so.
So how many buy to let mortgages are you allowed?
It really depends on the provider and on what they’re willing to lend you. Some will only allow you to take out one or two buy to let mortgages, some will allow you more but will be more willing to do so if the properties in question are spread around different areas. Some will have no restriction whatsoever, allowing you to take out as many mortgages as you like so long as you can come up with the deposit and prove that you’re rental income will cover the costs.
Exactly how much rental income is required for the mortgage to be allowed will depend on the lender; some will want your rental to total 150% of the mortgage repayments each month, some only 125%.
Because of the variety of different policies that different mortgage providers follow, it’s important to shop around online to see what mortgage deals you could get. Remember, just because you’re turned down by one lender, it doesn’t mean you’ll be turned down by the rest!
Main residence and multiple mortgages
If you want to take out a second residential mortgage, then you will generally have to prove to the mortgage provider that one of the properties in question is your main residence. You’ll also need to provide some justifiable reason as to why you need to take out a mortgage on a second residential property. This is to prevent illegal subletting – residential mortgages are cheaper than buy to let mortgages and so lenders will want to be certain that you are not trying to deceive them and earn rental income on a second residence.
You may, though, be able to take out two residential mortgages if, say, you live in one property during the week for work and in another during the weekends, but few lenders are prepared to do this.
Getting approved for extra mortgages - affordability
The main barrier to getting multiple mortgages is, rather simply, your ability to afford repayments on them.
If it’s buy to let mortgages you’re after then the main criteria for affordability will be potential rental income.
With residential mortgages, the lender will need to construct a fairly detailed picture of your overall financial health. This will involve both your household income and any outgoings, from a Netflix account to your existing mortgage repayments.
As is the case with any mortgage, your credit rating will be taken into account so that the lender can have some kind of proof of your ability to pay back any money that you borrow.
Compare mortgages online
Whether you’re looking for a buy to let mortgage on a second property, or a residential mortgage for a weekend home, you should compare mortgages online with Money Expert. We’ll get you a list of the best mortgage deals available from the market leading lenders so that you can pick the best loan with the best interest rates on offer.