Buy to sell mortgages: How to finance a house flip and more

Buy to sell mortgages are an attractive option for anyone looking to buy, and then sell, a property quickly.

In this article you’ll find out what a buy-to-sell mortgage is, how to get one and where to find the best interest rate deals.

What is a buy to sell mortgage?

As the name suggests, a buy-to-sell mortgage is a short-term home loan available for anyone who is looking to buy a property and then sell it on, for a profit, soon after – typically within twelve months.

Property investors are the prime customer for buy to sell mortgages, where an opportunity to buy a property, complete some renovations, and then sell it on straight away is identified. This is also known as ‘flipping’.

This type of finance is, essentially, a bridging loan. Unlike standard mortgages, buy to sell loans are arranged within days, rather than months and can be used to buy properties that are unfit to live in when they’re first bought.

When would you use one?

Buy to sell mortgages provide a bridge for a short-term gap in financing and can be used in a range of situations, such as:

• Auction property purchases where 28 day completion timescales are usually in place (BTS mortgages are also referred to as auction finance)
• Complete renovation/rebuild of a currently uninhabitable property
• Flipping – buying and selling a property for a profit in a short timescale (weeks/months)

In all of the above scenarios, time is very much of the essence, which means an appropriate alternative to standard mortgages, which may take weeks or even months, needs to be found.

This is where buy to sell mortgages can provide an effective solution.

However, this type of lending is generally only available through specialist lenders.

So, the challenge is how to find them – quickly! This is where having an experienced mortgage broker, with experience in this area, can be a real advantage.

How to get a buy-to-sell mortgage?

If you’re looking for a buy to sell mortgage there’s a few simple steps you can take straight away that will make the whole process much swifter and more straightforward.

This is how we recommend you do it…

Step 1. Do your research

First things first, you should thoroughly research the local property market and auctions before you commit to a purchase.

What investment return can you realistically expect from the dwelling you’re looking at? Have you spoken with any local agents about the prospects within the area?

Renovation budgets are also an important consideration, bearing in mind the boom in material prices due to current shortages.

It’s always wise to place a buffer on what you expect overall costs to be.

Step 2. Prepare your documents, exit strategy and credit reports

You will want to have three months bank statements, proof of address and proof of income all prepared and ready for when you want to apply for your mortgage.

As this is a bridging product, you will also need to provide a clear exit strategy to evidence to your lender how you will repay your loan.

With this type of home loan, it’s nearly always the property sale that will be used.

It is also very important to know your credit score and have access to your reports. This is to correct any issues or anomalies, which you may not have realised were registered on your record.

We offer a dedicated credit reports hub, which you can download your credit reports through.

Step 3. Speak to an experienced buy-to-sell mortgage broker

Once you’ve got your documents and your credit reports together, you will need to speak to a broker who specialises in how to get buy-to-sell mortgages, as the number of lenders for this type of finance is limited.

By using a broker, they will be able to identify which lenders can help, saving you a lot of time and manage your application so it can be prepared and submitted quickly.

Our free, broker-matching service will assess your needs and circumstances to pair you with a mortgage advisor who’s ideally placed to help you – Make an enquiry to get started.

Eligibility requirements

The key to a successful buy to let mortgage application is not just speed or having an effective exit strategy prepared, it’s also about having sufficient liquidity available as larger deposits are usually a standard requirement.

Typically, deposits for this type of finance are between 20%-25%.

This may vary from lender to lender.

The more deposit you’re able to put down, the more lenders will be willing to consider your application and the better terms (and rates) you’ll qualify for.

In addition, other general eligibility requirements will centre on:

How much can you borrow?

The amount you can borrow largely follows suit with other standard mortgages and, again, will vary from lender to lender, but around 4.5x your annual earnings is usually a fair indicator.

This can include a partner’s salary if you’re buying with someone else.

Try our affordability calculator below to work out your maximum borrowing.

Mortgage lenders and rates

Here’s a few examples, currently (May 2023), of what terms some lenders are offering:

United Trust offers a buy-to-sell mortgage at 75% loan-to-value (LTV), with the loan term available up to 36 months, loan amounts between £125,000-£25,000,000 and the monthly interest rate ranging between 0.48% and 1.1%.

Alternatively, LendInvest has a 75% LTV product available with the loan term up to 18 months, maximum loan amount at £15m and monthly rate ranging between 0.49% and 0.69%.

The rates listed above are fairly standard for this product type, but they are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of interest rates at any given time.

Are there alternatives to buy to sell mortgages?

The main alternative to buy to sell mortgages, or any standard bridging loan, is buy-to-let, however these are only worth considering if the property you intend to buy does not need any refurbishment and your long-term plan is to rent it out.

Buy-to-let mortgages would also be much slower to get approved, which could make a big difference to you securing the property you want (at auction, say) or not.

This would also be the case for residential mortgages.

Get matched with a buy to sell mortgage broker

A buy to sell mortgage is a great option when looking to quickly purchase a property for a profit and with the right advice you will be able to do this.

This is why the shrewd move is to seek the help of an experienced buy to sell mortgage broker who would already know which lenders will be able to help and offer the best terms available.

Call 0808 189 0463 or make an enquiry and we can arrange a free, no-obligation call with a buy to sell mortgage broker with the right experience today.