You have two primary options for financing your rental properties. Your first option is to arrange separate non-owner occupied mortgages for each individual property. In this case, lenders may limit your loan-to-value (LTV) ratio to 75% or lower for each mortgage. Additionally, you may need to work with multiple lenders to arrange the loans as some lenders limit the number of mortgages they offer to borrowers to four or lower. Also, please note if you use separate loans for each rental property, some lenders may apply different loan-to-value (LTV) ratios for each property depending on their cash-flow characteristics and other factors.
We provide a comprehensive overview of non-owner occupied mortgages and interest rates on FREEandCLEAR and we recommend that you contact multiple lenders to understand how they would handle your unique situation. You can review lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as qualification guidelines vary plus I think you will need to work with several lenders to finance the properties with separate loans. Comparing lenders is also the best way to save money on your mortgages.
Your second financing option is to finance all the properties with a single, cross-collateralized mortgage. This type of loan is typically offered through bigger banks such as Chase, Citibank and Wells Fargo. While arranging a single loan against all the properties may seem like a simpler option, cross-collateralizing the properties can actually bring added complexity and lending requirements. For example, it may be challenging if you and your co-mortgagors decide to sell one of the properties in the future because that impacts the underlying collateral of the loan. On the other hand, borrowers with significant net worth may be able to obtain favorable loan terms from a bigger bank, especially if you and your co-mortgagors are willing to move some of your assets to the bank.
Although I am biased toward the separate mortgage financing option because it provides greater financial flexibility, my recommendation is that you explore both the separate and single loan options to determine the financing approach that is right for you and your co-mortgagors.