The mortgage on the principal residence (the house you live in) is deductible. Meaning the payments toward the principal loan over the next 12 months can be deducted from your Zakatable assets when calculating Zakat. However, as for the investment properties, or properties you have rented out, this allowance is not applicable.

The example you have one property mortgaged in which you live in and two more that are mortgaged and rented out. You would not pay any zakat on the 2 rental properties, nor deduct anything from the mortgage loans applied to them. However, if you have surplus revenue from the rental income after expenses, which you have accumulated, then that cash is part of your overall asset pool, and thus Zakatable at 2.5%