Getting a mortgage can be difficult, often having to jump through multiple hoops to prove who you are and that you’re a credible borrower. This can be made even harder if you’re wanting to secure two mortgages with different lenders, so is it possible?
Yes, you can have two mortgages with different lenders, it all depends on whether you can afford the monthly repayments and prove you are a low-risk borrower. From a lender’s perspective, the more money they lend the more money they make, you just have to tick the right boxes.
In this post, I’ll run through a number of things that you need to consider when applying for a second mortgage so you can put yourself in the best position to get approved.
Can You Have More Than One Mortgage?
Yes, you can have as many mortgages as you want, you just have to find a mortgage lender that is happy with your affordability. There are plenty of reasons for wanting more than one mortgage from investing in a buy-to-let, getting a holiday home or even just buying a property for your family.
If you’ve been declined for a second mortgage doesn’t mean that it’s impossible. However, if you have been refused a mortgage be careful applying for more. This can negatively impact your credit score if you have multiple hard credit searches and one question that mortgage lenders can ask is whether you’ve been refused finance in the past few years and if you have a long list
How To Get Approved For 2 Mortgages
In order to get approved for 2 mortgages, you need to be able to demonstrate to the lender that you’re able to afford the monthly mortgage payments and are a low-risk borrower. This involves performing additional checks such as reviewing your credit report and your spending habits.
- Able to afford the new mortgage payment on top of existing mortgages. This involves demonstrating you have enough income to pay for the mortgage payments. This can be done in a variety of ways such as having the income from a job or earning money from rent with a buy-to-let.
- Good spending habits. Mortgage lenders don’t just want to see that you have enough income to support the mortgage payments, they also want to see you can properly manage that money with good spending habits. This helps the mortgage lender gauge their risk, I’ve written a post about how mortgage lenders review spending habits which may be useful.
- Ensure you’re creditworthy and have no issues with your credit score. A key source that mortgage lenders use when assessing your mortgage application is your credit report. Getting one mortgage with bad credit is hard enough, however, getting two can be even more difficult as the first mortgage will be an additional obligation.
- Make your intentions clear and demonstrate you have the right intent. Sometimes illegally, people buy properties on a residential mortgage with the intention of letting them out as residential mortgages have a lower deposit requirement. Also, the other way round, if people take out a buy-to-let mortgage for a property they intend to live in so they don’t have to prove their income. If the lender becomes aware you run the risk of your application being denied, or the mortgage product being cancelled if it’s already in place which a lot of lenders are starting to crack down on.
- Have enough of a deposit. Depending on what type of mortgage product you do for, residential mortgages require usually at least 10% and buy-to-let at least 25% down as a deposit.
What Income Do You Need For Two Mortgages?
Lenders typically use between 3.5 to 4.5 times your income as the amount they’re willing to let you borrow in a mortgage. This means for example if your income is £50,000 per year, you’re able to borrow between £175,000 and £225,000.
This can be great if that amount of money will cover both of the properties you’re looking to purchase, however with the price of property skyrocketing in recent years, that may not be the case. This is why renting out one of the properties may be a great option to help increase your income and affordability in the eyes of a lender.
If you are going to go down the route of renting one property out to use this income to help improve your affordability for a second mortgage, then a mortgage lender may want to see the history of rental payments and that the other property is financed through a buy-to-let mortgage.
If you don’t have a buy-to-let mortgage, I’ve written this post about whether you can rent out a property on a residential mortgage that you may find useful.
Combining Two Mortgages Into One – Cheaper?
It’s possible to combine two mortgages into one mortgage which can help you reduce costs and make it a lot more simple to manage with just one monthly mortgage payment and one remortgage schedule. However, if you ever wanted to sell one property you’d need to get a new mortgage for both.
You won’t be able to combine two different types of mortgages into one as they’ll each have their own respective terms and conditions. So that means if you had multiple buy-to-let mortgages, you may try and combine those together, however, wouldn’t be able to combine a buy-to-let with a residential mortgage.
Can You Have Multiple Mortgages On One Property?
No, typically you can only have one mortgage on one property as the mortgage lender will want to use the property as security in case anything goes wrong with the repayments. This helps them reduce their risk of lending you the money as they can sell the property in the event of a default.
There are situations where you can have more than one mortgage on one property. For example with part ownership, if one person owns 70% of the property and another person owns 30% of the property and each person gets a mortgage independently that can mean one property can have multiple mortgages.
However, in this scenario the mortgage lender may request a higher interest rate as if anything were to go wrong with repayments it’s a lot harder to sell a share in a property compared to the whole property. So if you’re in this situation, it may be worth discussing with a mortgage advisor to understand your options.
Summary – So Can You Have Two Mortgages With Different Lenders?
Overall, yes you can have two or even more mortgages with different lenders, it all depends on your affordability and the level of risk you pose as a borrower.
To get started applying for a second mortgage, whether it’s another residential mortgage or a buy-to-let mortgage, speaking to a mortgage broker can help you understand all of your options and give you the ability to ask any questions.
Just make sure you’ve put yourself in the best possible position by being able to demonstrate you have the income needed to support the repayments and have checked your credit report to make sure there are no unexpected surprises.
I hope this post has been useful and helped give you something to think about, good luck securing your next mortgage.
Hi, I’m John. I’ve always had a keen interest in Finance, so much so that I’ve made a career out of it! This site is a place where I can share everything I’ve learned as well as give me the excuse to research certain topics.
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