Are you looking to expand your real estate investments or purchase multiple vacation homes? You may be wondering if it's possible to get two buy-to-let mortgages at the same time. The answer is yes, you can take out multiple mortgages, depending on your needs and ability to pay for them. In this article, we'll discuss the maximum number of mortgages you can have, the interest rates and requirements that may vary depending on the lender, and the reasons why you might need a third mortgage. In general, it's possible to have up to two residential mortgages at the same time. This is usually done when homeowners want to buy multiple properties to rent out.
However, lenders will look at your total debt obligations when considering whether or not to grant you a loan. It's also important to note that it's very difficult to have more than two residential mortgages, which are mortgages for houses or flats where you or a member of your family will personally live. You will have a first mortgage called a first position mortgage and you can get a second mortgage called a second position mortgage. This is the main way lenders prevent people from illegally subletting properties to avoid the higher interest rates and deposits that come with purchase-to-rent mortgages. This is often used as a way to cover expenses you might not otherwise be able to afford, whether they are essential repairs, increasing the deposit for a new property, or paying off other high-interest debts so that you only have to worry about your mortgage. And even if a bank or lender decides to grant you a loan for a third mortgage, the rates can be astronomical for good reasons, so you may not be able to meet the requirements.
If your second property is going to be buy-for-rent, the lender will also calculate if you can pay your mortgage based on the amount of rent you plan to collect and if it's a feasible amount in your area. A second mortgage can be from the same lender or from a different lender, and you usually end up paying two mortgages every month. Before doing so, it's important to obtain a consent form to rent from your lender. However, if you want to move out of your house and need a mortgage to do so, you may not necessarily have to sell your home before buying a new one. This is because it may be easier to get a residential mortgage, since you won't need a larger deposit like you would with a purchase-to-rent mortgage. A third mortgage would make financial sense if you can find one with favorable terms and your first two mortgages would entail a hefty prepayment penalty.
In addition, every time you apply for a second residential mortgage, you must show your lender that you have a good reason for needing a second home.