Can I take out two mortgages at the same time?
If you have the financial ability to pay two mortgages at once, you can theoretically conclude several contracts and pay them off at the same time. But this transaction won’t be easy; it’s difficult to get approval.
Is it possible to pay off two mortgages at the same time, take a second or even a third. Consider the situation when the borrower wants to buy several properties at once, and if he or she intends to take out a new loan while the first one is in effect.
There is no legal limit on how many mortgages the borrower has. Theoretically, he could pay off at least 5-10 loans at a time, if he can do so if his ability to pay.
Similarly, there is no mention of how many properties can be purchased with one loan from the bank. That is, again, theoretically, you can buy two apartments with a mortgage at a time.
Buying two apartments with a mortgage
The standard algorithm of registration of the mortgage loan the borrower acquires a single object, which is insured, which is imposed on the encumbrance. And in case of a gross default, the bank can seize the property, sell it, to cover the proceeds of money debt and its losses.
But what happens if two apartments are purchased under one mortgage loan? Then the bank will have to take two apartments, as they are both pledged under the same contract, in case of default. And this is more complicated and problematic.
That’s why even if the bank admits buying two apartments for a mortgage, it will be two separate deals, which are independent of each other. And there will be one collateral for each deal – one apartment.
Banks do not advertise the possibility of arranging two mortgages at once, so the information about the deal should be clarified in the mortgage department of the particular bank. Perhaps under the bank’s unspoken rules it will not be possible. But if you want to find a lender you can.
How the deal is done
In fact, it really is very convenient. For example, a family has two children growing up, and the parents want to buy two apartments with a mortgage, providing real estate for the children. And while the children are growing up, you can rent the apartment, thereby partially covering the monthly payments.
If the bank will be ready to conduct such a transaction, the scheme for acquiring two apartments for a mortgage will be as follows:
- First, the borrower (or two borrowers, if they are spouses), collects documents on income and marital status. If there are additional sources, it is extremely important to document them all. All papers are collected in duplicate.
- To apply for two mortgages, it is better to apply directly to the bank. The manager will make two applications at once and send them for consideration.
- Within 2-3 days, an answer will come. And the decision can be anything. You can refuse both applications, approve only one or two at once. In practice, it is very difficult to get two positive decisions at once.
- If you are lucky and the bank approved two mortgages at once, each will be announced the amount within which you can look for an object. Not necessarily it will be equal amounts, for example, on one mortgage it could be $ 100,000 for the other – $ 70,000.
- Next, the borrower proceeds to the selection of housing. If it is the primary market, you need to look only bank-accredited facilities (list and map is on the bank’s website). Then, for each apartment gathers a separate set of documents, each evaluated separately.
- The borrower submits the documents on the apartments for legal inspection. If the bank reveals no faults, it gives the final approval.
- As a result, two loan agreements are concluded, and the borrower will pay two mortgages at the same time.
Each contract is independent, they do not depend on each other. They can have different amounts and terms, apartments can be purchased from different sellers, may have different status – ready-made housing or under construction, the secondary or primary market.
The borrower insures each apartment, and the objects become the pledge. Insurance for the objects need to be renewed annually. The encumbrance on the property is removed after the mortgage is paid. Again, one mortgage can be closed faster than another. For example, you can close one early and keep paying the other.
Same bank or different banks
Theoretically, you can take out two mortgages at once either at the same bank or at different banks, as these are two separate transactions. In general, it is more difficult to do it within one bank. They do not welcome such deals, seriously overstating the requirements for the borrower, his level of solvency, the employer.
If you apply to different banks, they may not even know that you intend to sign two mortgages at once. So it will be easier to get approval. The main thing is to act at the same time. For example, you can send an online application for a mortgage at once in 3-5 banks, get a few positive decisions and continue processing two of them.
But it’s important to objectively assess your level of solvency. The financial burden of paying off two home loans at the same time is enormous. Do not get in over your head to avoid problems in the future.
It is not against the law to take out two mortgages at different banks. There is also no legal obligation to inform the banks that you are applying for a loan somewhere else at the same time.
Registration of the second mortgage, if the first one
Now a completely different situation – you already have a mortgage, which you are paying off, but it became necessary or possible to take a second mortgage. And this action is also possible, although there are nuances.
You can apply to the same bank, and in another – choose where the offer will be better. An important point – when considering the application for a second mortgage, the bank will take into account that you have a “history” of the existing loan agreement.
Be sure to analyze the level of solvency. The bank will consider whether you can simultaneously cope with two trips and other mandatory expenses. If your salary allows, other debts and obligations do not hit the pockets, it is quite realistic to be approved for a second mortgage.
The most important thing is the borrower’s ability to pay!
As in the first and in the second case, the main point is the level of solvency of the borrower. If a person intends to take out and pay back two large loans at the same time, his financial life should be as stable as possible.
To increase the likelihood of approval of a second mortgage or two at once be sure to document all of your family’s sources of income. If possible, make as large a down payment as possible, it will increase the loyalty of the bank. And consider preferential mortgage programs with lower rates.