There may come a point in time when someone who is an existing homeowner may look to buy another home or take out another mortgage.
You will find that there are a multitude of reasons as to why someone may be considering this as an option, though there’s no specific answer to the question for either.
On a theoretical technicality, you can have as many mortgages as you want, there is no limit. What does matter though, is whether or not a lender will grant you these mortgages, that’s the difference maker.
In order to best understand each situation and where circumstances may differ, we have compiled a short article detailing how this may work for both residential and buy to let mortgage scenarios.
Can I have two mortgages? In some cases, we see customers that require multiple residential mortgages.
When it comes to this, a mortgage lender will want to know first and foremost that you can afford to do so, and that you have a good reason for taking out another residential mortgage.
The most popular reasons that we find for homeowners doing this, include to purchase a home away from home, if you work in a different location and need somewhere to stay a few days a week, to purchase a second family home for holidaying purposes.
Less popular, but still an option, is to purchase a second home for another family member, perhaps parents, to live in.
Outside of this, you might find obtaining a second residential mortgage a bit more complicated, as you can only live in one property as your main residence.
This comes more so into effect with Help to Buy Scheme users, as that property has to be your main residence.
You also cannot buy another property with a residential mortgage, with a view to let it out. Buy to let mortgages are taxed differently, so this would be illegal.
You may be able to rent out an existing residential property though with prior consent from the lender. This is called consent to let and allows homeowners to temporarily rent out their property for a short length of time.
A residential mortgage means that you will be securing a large scale loan against your property. This is referred to as a ‘first charge’.
This first charge means that in the event of say a repossession, where a home is sold off by the bank, the mortgage lender gets to claim how much they’re owed from the sale, before the remainder is distributed amongst anyone else who may be owed money.
With this in mind, you can typically only have one mortgage on a single property at one time. The exceptions to this rule would be if you took out a second charge mortgage or a further advance.
Both of these function in a way that allows you to borrow slightly more from the same property, with second charge being with the same lender and further advance being with a different lender.
Because you will be borrowing more on top of your existing mortgage, you will be subject to a mortgage lender’s affordability checks, with a process similar to how you first took out a mortgage.
Depending on the one that you take on, these could end up costing quite a bit more, so it’s always worth learning more about them by speaking with a trusted mortgage advisor, before applying for something like this.
Unlike residential mortgages, buy to let mortgages are a little easier to work with when you want more than one of them. It’s commonplace for a buy to let landlord to have quite a few properties to their name or under their limited company.
In terms of any limits to the amount you can borrow, though the specifics may vary from lender to lender, there is generally no strict limit on the amount of mortgages you can have on buy to let properties.
Once again, a mortgage lender will want to make sure that you can afford to take out another mortgage, though the positive with some buy to let mortgage lenders, is that so long as it passes their initial stress test and you can find a tenant, your buy to let should theoretically pay for itself.
The only major issues that could stop you from taking out a further buy to let mortgage, is the location of where you’re looking to expand your property. For example, a lender may be less willing to lend on a street where you already own a property.
Alternatively, a lender may not be willing to lend on a property that is in an area where they already have stakes in other properties. The reason for both of these working against you, is one of those properties goes down in value, they’re likely to be out of pocket on the rest of them too.
No, you cannot live in a property that is currently under a buy to let mortgage. This is a breach of your contract and you may be subject to fines and potential further legal action.
If you no longer have a tenant within your buy to let property and would like to convert it into a residential property to live in, this can be achieved by taking out a remortgage.
Speak to a qualified buy to let remortgage expert to learn more about this option.
If you are looking to take out a second residential mortgage or if you are looking to expand your property portfolio, you’ll benefit from speaking to a trusted and experienced mortgage broker.
We’ll be able to review your case in advance before sending it off to the lender, to make sure that this is a viable route for you, saving you from potentially harming your chances of obtaining a future mortgage if this is something you cannot currently do.
Book your free mortgage appointment and one of our mortgage advisors will see how they are able to help with what you are looking to achieve.