how many mortgages can one peron have?

[Tortington]

i have a "friend" who told me a story about how he wants to buy a property to rent, then re - mortage this property to buy another property. then remortgage that property to buy another and so on.

i didn't believe him - but its been playing on my mind

is there alimit to the amount of mortgages to can have? and can you actually get a mortgage on a property you are not going to live in yourself. theres got to be a catch?

thanks

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also he is likely to have to stump up a greater deposit on a buy to let property - probably about 25% at least -than on a conventional home mortgage

Hi - I arrange buy to let mortgages (for my sins) - he would need 15% minimum deposit on each and rental income needs to be approx 125% on mortgage interest payments. Twiglett is correct in saying that there is, in theory, no limit to the number of mortgages a person can have. Someone could even have more than one residential mortgage if their salary was large enough to cover it. If you want any more info please feel free to conact me via Contact another talker.

ok think things have got mixed up - or i dont understand.
he is buying the first property outright. if he buys it ouright does he need a mortgage or re-mortgage to buy a second property ( i dont know why it would be a re - mortgage if there wasnt a mortgage in the first place) - does that even matter? so with a property bought outright, does he still need a deposit if he mortages ( or re-mortages whatever) the first property to buy a buy to let property.

are you still with me?

but if he's buying first property outright then why doesn't he just get a mortgage on the next one he wants to buy and so on.

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Maybe the reason he is taking out a mortgage against the first house is so he can borrow enough money to buy the second house and have extra for renovation etc. If you take out a mortgage on the second property you could only borrow usually up to 100% of the value of the house in which case you couldn't borrow enough to do the renovation as well. This of course assumes that the second property is worth alot less than the second one. Either way the conditions of the mortage would probably be the same as it would be a buy-to-let.

The easy way to look at it is, a motgage is just a loan of money. The house is just security against the loan based on its value as an asset. All the lender cares about is that if you fail to pay the loan that they can re-possess your house (whichever one it is secured against) and sell it without making a loss. This is why buy-to-let mortgages are at a higher rate and generally you need a bigger deposit i.e. the amount you borrow is alot less than the value of the house so the risk to the lender is less. The theory being that when you buy a second house the risk of not repaying the loan is greater (bad tenants if you are letting it out, people will pay for their first mortgage as a priority if they have financial difficulties etc). The only thing that matters is the value of the asset the loan is secured against versus the value of the loan.

Buy-to-let is a bit of a misnomer though because any house you buy, if you already own one, is a buy-to-let regardless of whether you have tenants in it or not.

I'm sort of in the same boat at the moment. We are re-mortgaging part of our own house to buy another (small and delapidated and in a cheap part of the country, we're not that rich!). I have to borrow the money against our first house because we need to borrow about 200% of the value of the 2nd house to cover renovations, so we couldn't secure it against the second house.

dh of Hayls (hayls has baby brain so obviously wasn't her who wrote that)

he is just adamant that he is going to buy the first property out right to let out. he doesnt own any other property. then he will get a mortage on that first house he has already bought and paid for to buy another property.

once he has bought the 2nd property by mortaging the first. can he then buy a third property by mortaging the second and so on. is this allowed is what i am asking. all the properties will be to let

yes, its allowed. The rental value of the property determines how much they well lend you - much like your job income does when you get a normal mortgage.

When you buy a house outright without a mortgage and then later mortgage it, its referred to as a remortgage. If you get a second mortgage on a house that's also referred to as a remortage. The next house he bought with the cash from the remortgage of the first would be 'mortgaged'. People do it this way because then they have cash to buy another house and can often get bargains because they can move quickly on a purchase.

I was looking into this last year (but got nervous cos of all the doomful reports) and found I could continue doing this and have mortgages up to a million pounds in my own name and a further million pounds in my husband's name.

Imagine if you did that though and the tenants didn't pay rent? It can take ages to evict a tenant even with the supposedly safer 6 month tenancies. No rent no money to pay mortgage = panic stations! If you didn't fix the rate on the mortgage you'd also have to worry about the interest rates going up, as they have been.

thank you very much debra very enlightening