In this brief guide, we are going to answer the question “how many mortgages can you have”.
How many mortgages can you have?
2 if residential. As much as you can afford if buy to let.
In reality, you can have as many mortgages as you want, there are usually no restrictions on how many mortgages you can have but to give a much better answer to this question we must look at the two main types of mortgages: Residential mortgages and buy to let mortgages.
how many residential mortgages can you have?
You can own as many residential homes as you want but in regards to how many residential mortgages you can have, you may find it difficult to have more than two residential mortgages. The reason is quite simple.
Most people will have one home and one holiday home. Most mortgage lenders are happy to treat both of these as residential properties which are not being let out usually and hence will be happy to give you a residential mortgage.
If you want more than this you may find it harder to find a residential mortgage lender willing to lend to you as they will think you are using the property to gain rental yield and hence you should be getting a buy to let mortgage and not a residential mortgage which is known to be much cheaper than comparable buy to let mortgages.
Although if you are able to prove to the mortgage lender that your homes are simply residential then in principle you should be able to have as many residential mortgages as possible, sometimes this may not be the case.
If you are considering having more than one mortgage then you should consider using a multiple or additional mortgage calculator to see what the costs could look like.
The main consideration for most mortgage lenders when looking at how many mortgages you can have is if you can afford to keep up the monthly mortgage repayments on both mortgages.
To do this the mortgage lender will conduct a mortgage affordability assessment by asking you to complete a mortgage fact find. They will then let you know if you can indeed afford the mortgage by issuing you with a mortgage in principle or a mortgage offer.
Consent to let
If your concern is that you want to have multiple properties which you rent out then you should definitely ask your mortgage lender before you rent out any property with a residential mortgage.
If you do not get your mortgage lenders permission and you let out a property which has a residential mortgage on it then your mortgage lender could call in your mortgage which means you will have to pay up the outstanding balance on your mortgage by a given date which could be within 8 weeks.
how many Buy to let mortgages can you have?
Buy to let mortgage lenders now have restrictions on how many buy to let mortgages they may be willing to allow you to have before lending to you on another buy to let mortgage. This can be from 3 to 10 depending on the buy to let mortgage lender.
You should note that this doesn’t concern how many properties you have but rather how many buy to let mortgages you have.
The buy to let mortgage lender will want to see that you are not overstretched and that you can continue to comfortably make the monthly mortgage repayments on your buy to let mortgage.
With some buy to let mortgage lenders there is a bit of relaxation for these rules based on the borrower’s experience. If you are an experienced buy to let investor then you may find that the buy to let mortgage lender is willing to relax its rules for you.
If on the other hand, you are a first time buy to let investor then there is practically no chance the rules will be relaxed to accommodate you.
Buy to let mortgage lenders usually have a rental coverage which they are looking for and in some cases, they may look at all your existing properties to see what the rental coverage is on them and if you are n a suitable financial position or if you have more exposure due to your other buy to let mortgages.
This will, of course, influence their decision to lend to you or not.
Government scheme considerations for two mortgages
To get a mortgage these are the government schemes which may enable you to get a mortgage. You can check if you are eligible for these government schemes by using a government scheme eligibility calculator.
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy– allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
You should note that with almost all the government schemes above you will not be able to claim them if you own a property or more than one property. You will also therefore by default not be able to claim any of the Government schemes if you already have a mortgage.
Stamp duty considerations
When thinking about how many mortgages you can have you should be aware that you will be liable to pay stamp duty and other related costs such as home insurance, council tax and any other utilities on each property.
Stamp duty will likely be the biggest of your worries as the stamp duty rates on additional properties is plus 3% than the standard rate.
You can use a stamp duty calculator to see what your stamp duty liability may be.
Using a mortgage broker for an additional mortgage
You may want to consider using an independent mortgage broker to get a mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
FAQs: How many mortgages can you have
In this brief guide, we answered the question “how many mortgages can you have”. If you have any questions or comments please let us know.