Technically speaking, if you are a borrower in BC, Canada, there is no limit to how many mortgages you can have. That’s of course if you can afford the repayments on all of them. And obviously, if you can find a mortgage servicer who will trust your affordability.
One thing you should know though is that most traditional lenders will not easily finance more than four properties. But whether you want to buy investment property or you just want to acquire a holiday home for your family, there are ways to scale your real estate portfolio.
So in case you are worried about banks saying “no” to you, here’s all you need to know about obtaining financing for more than one property.
What Counts Most In How Many Mortgages You Can Have
If you are wondering how many mortgages you can have, you are not the only one.
This is a common question among most property investors. That’s because investing in real estate is a strategy which is both satisfying and lucrative for many people. And it’s not just us saying this. According to the Canada Mortgage and Housing Corporation, 15% of new mortgage loans in Canada in 2016 and 2017 were for second properties.
Still, many traditional financial institutions or mortgage companies view homeowners with multiple properties as risky.
Why is this?
Because the more properties and number of mortgages one has, the easier it is to get into mortgage payment difficulties. And the risk is even higher when all your rental properties are located in the same region. That’s because a downturn in the area’s real estate would affect the rental attractiveness of all the spaces.
On top of that, the COVID-19 pandemic also brought its own share of complications. Many real estate portfolios, especially those with greater human density such as malls or student housing have had huge financial shocks. Renting has dropped considerably, while many of them have already been sold off in considerable numbers.
The Process Of Getting Multiple Mortgages
When it comes to how many mortgages you can have, each lender is different. And so is the lending criteria!
Ideally, before starting shopping for an additional mortgage or home equity loan, you should have a clear idea about what you want, and need. With so many financial products on the market, the type of loan you choose should optimize your cash flow and the overall performance of your property portfolio.
And that’s when discussing with a trusted mortgage broker in BC comes in handy. A financial expert can help you decide what is the best option for you and your long-term investment goals.
But before anyone can give you a clear answer to how many mortgages you can have, the type of mortgages you are looking for is what matters most. It’s one thing to get a second mortgage on a house you are planning to live in. But if you are trying to get financing for the fourth buy-and-lease property, the situation is different.
When working with traditional lenders, the process for getting more than one single mortgage is very similar to what you probably went through the first time. Your affordability will generally be calculated by taking the same following aspects into consideration:
Proof Of Income: Banks will want to ensure that the risk they expose to when borrowing to you is not high. For that, they will look at your proof of income including tax returns, statement of assets and liabilities, and employment income.
You should also take into consideration you might need to provide financial statements on any existing investment properties. These include P&L, rent roll, and existing loan information.
Mortgage Insurance: Depending on the size of your down payment, monthly payments and the use of the property, low mortgage insurance might be required. Or none at all.
Creditworthiness: Creditworthiness is the extent to which a company or person is considered suitable to receive a loan. With banks, your credit report score might be the element which makes or breaks the approval of your loan.
Intent: If you have a real estate business, your long term investment plans matter. And so does the location of your assets. Some lenders won’t lend if your property is in a remote area that is not accessible during winter months. The same goes for houses in flood zones or the ones having structural risk. Sometimes, lenders will also want to check how your existing properties are performing, before deciding to approve your loan.
How Many Mortgages You Can Have From Private Money Lenders?
With all the criteria listed above, you might wonder whether getting more than one mortgage is even doable. We’re here to tell you that it is!
But what many real estate investors may discover along the road is that an alternative mortgage from a private lender might be a better deal than conventional loans. Especially when looking to obtain financing for multiple properties.
Why is this?
Because when working with our selected private lenders in Vancouver BC, you have the advantage of collaborating with a different type of lender. These are entrepreneurs who understand how investment real estate works. And most importantly, they have different ways of negotiation. Also, they are much bolder in taking risky decisions compared to employees working for banks or credit unions.
For us, every deal is different. But to get you prepared on how the process usually goes,
- We offer no income verification mortgages
- Our financial products have usually shorter terms
- Interest rates can be slightly higher than conventional mortgages
- Your home as collateral is all we need
- Fast approval processes
- Less paperwork for you. We will handle everything on your behalf!
- Our lenders are more interested in property financial performance and market value than your credit history and personal tax returns.
Have more questions about how many mortgages you can have or about our alternative mortgage process?
Contact us today for a free consultation and we can discuss what mortgages are right for you.