Two Mortgages on One Property

Posted on 27 March 2011 by liz


My husband and I are seperating, we have our own business and both have equal shares. I want to know if we can take out two seperate mortgages in both our names on each property. we both have 50% deposits on both properties.

Liz,

In theory it is possible to arrange two mortgages on one property but in practice you will find that the terms and rates for the second mortgage are not as favourable as the first.  This is because standard residential mortgages are arranged on the basis that they have the first charge registered against the property.  This means that if you were to default on your payments, they had to enforce possession and sale then they would have first call on the funds to repay the mortgage plus costs.  Second charge mortgages run the risk that there will be insufficient funds left to repay their debt in full and this risk is reflected in higher rates and charges.

However, mortgages have to be in the same names as the title deeds.  If you are both remaining on the title of each property then the mortgages will be in joint names and there is not much point in arranging two mortgages.  If however you are changing the titles so that you own one each then it will not be possible to arrange a mortgage on the property you do not own.

Peter

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