The ruling could mean banks may no longer be able to warehouse part of a mortgage when a formal debt deal is put in place for a homeowner.
Ms Justice Marie Baker ruled in the High Court, in an appeal case, that including a split mortgage as part of a Personal Insolvency Arrangement (PIA) was not financially sustainable.
The issue involves personal insolvency arrangements that also include split mortgages.
A PIA is the restructuring of mortgage and other debts, up to 3m, with a lower repayment made over a six-year period. Sometimes debts are written off.
Often a split mortgage, or warehousing, is agreed as part of the PIA. A split mortgage involves warehousing part of the mortgage amount, usually for more than six years.