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Buy to Sell Mortgages

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Aug 12, 2022

Buy to sell mortgages – How to get a buy-to-let mortgage and then sell the house?

A buy-to-sell mortgage is a good option if you want more flexibility in selling your property. What is a buy-to-sell mortgage? Where can you find one, and what professional mortgage advice can you get about them?

Enquire here today, we have a few mortgage providers lending buy-to-sell mortgages, bridging loans, and standard mortgages, and we also provide mortgage advice free of charge.

The mortgage advisor will be tailored to ensure you receive the best mortgage deal.

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What is a “buy to sell” mortgage?

A “buy to sell mortgage” is a short-term agreement that allows you to purchase a property and then sell it off quickly. This type of financing is available for many reasons, but it may be challenging to obtain with high-street lenders. However, specialist mortgage lenders and institutions may be able to offer more flexibility and lower rates.

To go into more detail:

  • Mainstream Mortgage Products are designed for people who want to make a long-term investment. They don’t require you to be tied down for 2 or 3 years. You won’t have to look for ways to sell the mortgage and pay it off within a set period. This will avoid any penalties.
  • These are specialist mortgage products designed for people who need to repay them in a matter of months or for long-term investments on properties that require serious renovations and are not habitable when purchased. These lenders may not have a strong presence on the high streets, but they are still reliable and secure.

Important: When you’re looking to purchase a property to sell quickly, there are typically three options.

  1. Short-term financing to buy a property – A specific type of short-term financing is best if you’re looking to flip the property and have it sold within 0-12 months. You will need to deposit at least 20-25% and be ready to put aside additional cash for fees (approx. 2% of the loan amount) and higher interest rates (approx. 0.7-1.5% per month). These fees and rates can change any time, but this gives you an idea of the monthly costs. This finance is ideal for properties that are not habitable or in dire need of renovations before someone can live there. Mainstream mortgages require the property to be suitable to live in. This could include properties that aren’t secure, haven’t got appropriate working facilities, lack multiple kitchens/ kitchens, asbestos, etc.
  2. Buy to Let Flexible – If you intend to rent the property, you might be eligible for a buy-to-let basis. These mortgages may come with very low or no repayment fees so that you can sell the property anytime. These mortgages cannot be used to purchase and sell a property quickly, and they require that you have an intention to rent it out. The lender will usually require that the property be considered ‘habitable’. This means it must be safe, have utilities, and be functional. A minimum deposit of 25-15% is required. Any lower than that will result in higher repayment fees. This option requires you to have your property. However, if you’re a first-time buyer, you may be able to get buy-to-let mortgages from a few lenders. You will likely face repayment penalties.
  3. Flexible residential – This last option is to buy the property, move into it, and reside there using a main residential mortgage. They are available up to 95% LTV, provided you do not own any residential properties. You must have a minimum 10% deposit to secure a mortgage. Lenders must consider the property habitable. A larger deposit is better than none. LTV deals usually come with repayment penalties. If you intend to sell your property early, a 25% deposit will allow you to access deals with low or no repayment penalties.

Mortgages for quick purchases

Investors who are house hunting or buying a bargain at auction often purchase, renovate, and then sell the property within a few months. This is sometimes referred to as “flipping” a property”. Often these investors need financing, such as a fixer-upper mortgage for property renovations.

These deals require speed to close. Often, the purchase must be completed within a specific timeframe (usually 28 days for repossessions or auction properties). If you don’t exchange contracts, your offer will not be secure.

You must pay a substantial deposit, usually 10%, to buy at auction. If the sale falls through you, risk losing your money. It is safer to have the funds agreed upon before bidding begins.

Standard residential mortgages

A few years back, it was easy to buy at auction with a standard loan. The lenders were fiercely competitive.

Many mortgage products were available before the credit crunch. As such, there was a wide range of mortgages without ERCs (Early Remuneration Charges), which are perfect for customers who want to buy and then sell without penalties.

Lenders will also do everything possible to ensure money is released as soon as possible.

While the service is still available to some lenders, it has declined to be as popular as others.

Customers had flexible borrowing options on their existing mortgages. This allowed them to have an open tab, pre-approved lump sum facilities that they could withdraw the same day, whenever they wanted, and without needing to apply.

These loans were ideal for investors who required cash immediately when the right property became available. These types of mortgages for new borrowers don’t exist anymore. Borrowers are now forced to search for other specialist solutions.

However, some customers still prefer to purchase at auction with a standard residential mortgage. We must make sure that we choose the right lender based on the best rates and service. This will ensure that the loan is approved and funds are available in the required time.

All lenders will now give you an agreement to borrow principle. This acts as a certificate that you can borrow up to ‘x’ amount based on the information provided, and the property is in good condition.

This is an excellent option if you need to buy quickly, whether it’s in an auction, a repossessed home, or any other type of purchase.

Mainstream lenders who accept second homes under standard mortgage products are a good choice if the property is in good condition, habitable, and you plan to move into it. They tend to be the most affordable.

You should not be moving in before completion. Many mainstream lenders won’t lend to you if you don’t move in, so find something else.

If the property is in a non-habitable condition and needs renovations, it’s unlikely that a lender would approve the application.

These specialist lenders are happy to approve lending on a “when done” or a “market value” basis. Lending is based on the property’s actual value, not your buying price.

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Buy to Let Mortgages

Investors often come to us seeking to purchase and sell properties but not move in. Investors will need either a lender willing to lend to them without having tenants lined up or a short-term specialist such as auction or bridge finance, especially if they are looking to sell quickly.

A buy-to-let mortgage is required if you intend to keep and rent the property. A standard buy-to-let product might be the best option if the property is habitable and structurally sound.

A standard lender might decline your application if the property requires significant renovations before tenants can move in.

These situations require a specialist buy-to-let lender specialising in properties purchased for renovations. Or you might need a short-term arrangement like an auction or bridging financing to finance the purchase and remortgage to a standard buy-to-let.

This is a great option, as the property’s value will likely have increased after the work is completed. You may be able to remortgage the property for more than you think.

Using auction mortgages/ bridging finance

Standard mortgages are not suitable for quick purchases because you may buy at a discount that the lenders will not recognise.

Imagine that the property is valued at £100k and that you are buying it for £80k. This would mean that a small investment to improve the property would make the purchase very affordable. Standard lenders almost always lend based on the price you paid, £80k. This is not the actual market value, £100k. This can limit your ability to borrow and the rate that you are eligible for.

Specialist bridging and auction finance firms will consider the property’s market value and lend on that basis. They may also consider the purchase price.

Auction finance or auction mortgages can be a type of bridge loan where money is borrowed on a short-term basis at a higher rate than standard mortgages (typically 1-3% per month).

Many borrowers plan to repay the loan in full in a few months. This could be with a conventional mortgage or by selling their property.

This arrangement is great because it can be done in days rather than weeks. It can also be lent without the lender having to appraise the property, which can sometimes delay completion by several weeks.

This type of bridging finance can be either ‘closed,’ where exit strategy and time frame are clearly defined, or open, which allows for flexible repayment. Open bridging tends to be more expensive because of the uncertainty involved.

This is a standard option for borrowers who are looking to buy quickly. They will then take out a short-term mortgage and then remortgage on a standard mortgage. Contact us if you have already paid your deposit but need quick financing.

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Mortgages for quick sales

Selling quickly can offer huge benefits but also huge risks. However, it is important to maximize your investment and minimize the cost.

Short-term financing without exit fees is a great option if you need a quick turnaround. You can choose a standard mortgage without Early Repayment Charges (ERC), short-term bridging, or auction finance.

Standard residential and buy-to-let mortgages

It is essential to minimise fees and repayment costs when buying to sell quickly. Standard mortgages now include lender arrangement fees at the beginning, the usual setup fees (valuation fee/ legal cost etc.), ERCs and exit costs if you need to modify or pay off the mortgage within a specific time frame.

A standard mortgage usually offers the lowest rate, but if you only borrow short-term, this may not make much different than a larger fixed arrangement or exit fee. It all depends on how much and how long you borrow.

As we have already mentioned, far more mortgage products were available before the credit crunch than today. This has led to a reduction in the variety of options.

Although most products without ERCs have higher arrangement costs and rates, products can still be used for short-term borrowing. These products are ideal for those who need them. We will search for these types of products when searching the entire market.

Bridging finance – Auctions / Bridging Finance

If you need to repay quickly, this is the best financial arrangement. You should consider the cost of borrowing and how fast you think you will repay it. The interest costs are much higher than a standard mortgage. Many investors and developers use bridging finance to purchase and sell.

Renovating properties requires mortgages.

Getting financing for a property in dire need of renovations can be challenging. It doesn’t matter if you already own the property or are buying it to renovate it; conventional mortgage lenders will likely decline any application where the property cannot be used as a dwelling.

Habitable = Although the property might need some work to make it ‘nice’, it is considered habitable if it meets these criteria: Completely enclosed with all windows/doors. Lockable entrance. Kitchen and bathroom with core amenities (water gas, electric, electric) working correctly.

For mortgage purposes, properties without a bathroom or kitchen would be rejected.

Specialist bridging finance firms can lend to people who want to purchase, renovate or sell a property at a higher price. They can calculate borrowing on a ‘when done’ basis.

Suppose you own a property valued at £180k and intend to renovate it to sell in three months for £200k. In that case, the lender will consider a loan based upon the £200k value (subject to your estimates being approved by their surveyor) – possibly helping you to finance the work.


What type of mortgage will I need if I am building my property?

A self-build mortgage is the best option if you’re looking to build or renovate your property on land you already own or are considering buying, such as converting a barn into a home. The mortgages release the funds at a fixed loan to value (LTV), usually around 70%. Maximum 70% at each phase.

The surveyor will inspect the property between each phase. After each step is signed off, the next phase will start, and additional money will be released.

Let’s assume you are buying land for £50k and that the total build cost of the property is approximate. £120k. This means the total cost of purchasing and building the property is £170k. Let’s say your lender is willing to lend up to 70% of the property’s LTV. The maximum amount you can borrow is £119k. The rest comes from your deposit, whether in savings or other unsecured borrowings.

Your lender would approve you initially for £35k if the £50k land purchase is phase 1.

Phase 2 could be for foundations and lower-level buildings. The lender approves an additional £28k.

Phase 3 could be the second-level build and roofing. It will cost a further £40k, and the lender approves another £28k.

Phase 4 could be the last phase, where utilities and electrics are installed. It also finishes the property to completion. This will cost a final £40k. The remaining £28k can be lent.

Our self-build-specific pages provide more information on self-build mortgages.

It can be challenging to find a self-build mortgage. This is because it is a more specialist mortgage. We can arrange mortgages for those who want to build their property.

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Is there a mortgage for land buying or selling?

The specialist market brokers we work with can assist you if you buy or sell land. Depending on your circumstances, this process is more complicated than buying a standard property. However, we work with experienced advisors who regularly arrange this type of mortgage.

We have helped many people buy land privately in various situations, including prime agricultural land, land purchased for logging, and land just for property development.

Contact us to get the best mortgage advice for your situation. No obligation, no cost initial advice.

Send us an enquiry. One of our mortgage specialists will get back to you as soon as possible. For immediate assistance, please contact us.

Talk to an expert

A mortgage broker is the best person to contact if you want a buy-to-sell mortgage. This is a group of advisors that specialise in these products. We can match you with the right broker for you with our free broker-matching service.

We will assess your circumstances and match you with the best expert to help you get a great deal on a buy-to-sell mortgage. We recommend a broker who has been arranging these deals daily and has a proven track record of helping customers like you.

We’ll schedule a complimentary, no-obligation consultation with you and your ideal mortgage broker.

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