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Mortgage Advisor & Director
What is a buy to sell mortgage?
A buy to sell mortgage is a loan designed to allow you to buy a property to sell on.
Particularly popular with investors, buy to sell mortgages are better suited to this purpose than standard mortgages which typically do not permit you to sell within six months of purchasing, and often charge early repayment fees. For this reason, if you're looking to sell a property shortly after buying, a buy to sell mortgage may be more appropriate.
What buy to sell mortgage options are available?
Depending on your situation and the property you're buying, there are many routes to access buy to sell finance.
Bridging Loans
If you're looking to sell a property within 12 months, a bridging loan might be a good option for you. Although they typically offer higher interest rates than mortgages, bridging loans can be used to buy unmortgageable properties and won't have any early redemption penalties. With a bridging loan, you won't need to wait for six months to sell the property.
Bridging loans also have the benefit of being set up quickly, and you could be in receipt of the funds in days, which is much quicker than a mortgage. For buying a property at an auction, this is another benefit where timing is critical.
Renovation Finance
If you're looking to buy a property that needs a lot of work, getting a mortgage could be a challenge. For properties that are classed as uninhabitable, it can be almost impossible to get a standard mortgage.
The good news is that there are financing options for properties that fall into this category. Securing a renovation mortgage can provide a capable vehicle allowing property investors to upgrade a property for sale. The loan amount is based on the forecast value of the property once improvement works have been completed.
A renovation mortgage can be 'light' or 'heavy' depending on the extent of the improvement works and is typically released in two phases.
Light renovation mortgages are used for properties that require minimal upgrade only, for example, the renovation that does not require planning permission. Examples of light renovation works include:
- Installing a new bathroom or kitchen
- Redecorating
- Fitting new windows
- Fitting a central heating system
- Rewiring
- Non-structural improvements
Heavy refurbishment mortgages are provided to facilitate more extensive works that are likely to require planning permission. Examples of heavy renovation works include
- Property extensions
- Loft conversions
- Structural works - internal and external
- Full conversions.
For development works that are more extensive than this, development finance is probably more suitable.
Flexible mortgages
A flexible mortgage is one that has minimal or zero early repayment fees, which means you are free to sell at any point without waiting for the initial mortgage term to pass.
Flexible mortgage options are available in both the residential and buy to let markets; however, the property will need to be habitable for the application to be successful.
Development Finance
Not to be confused with a bridging loan, development finance is supplied in stages to support a property development project. Development finance can be used for both conversions and ground-up developments, funding both the initial land/property purchase and build/conversion cost.
Generally, development finance is granted to experienced builders and developers, with specialist lenders taking into account the future value of the property when considering the application. There are specialist lenders who would be willing to work with inexperienced developers in certain situations; however, these options are rare.
Can you get a buy to sell mortgage?
As a specialist mortgage product, we would recommend engaging an experienced broker to arrange your buy to sell mortgage. At Teito, we are a whole-of-market service which means we offer thousands of mortgage deals not generally available to the public, including buy to sell mortgages.
Our team of experts have helped many property investors like you to access the finance that's right for them, complete our simple online form now to get started.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
