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Buy To Sell Mortgages

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Buy To Sell Mortgages

Our short-term finance service provides:
  • Bridging loans from £50,000 to £25M at market-leading rates
  • Regulated finance for downsizing or upsizing residential property 
  • Unregulated finance on investment properties for resale
  • Short-term renovation funding
  • Rates from 0.43% pm
  • Lower rates for £1 million+ loans
  • £99 valuation-fee option for properties up to £1 million
  • Terms from 1 to 12 months for regulated lending, up to 18 months or longer for unregulated
  • Interest roll-up options
  • We provide a friendly, professional service to help you get the money you need at the best available rates

Residential

Buying Before Selling?

Rates from:

0.55% pm

Downsizing/Upsizing

Releasing Funds From Your Home

Short-Term Lease Finance

Auction Purchase

As at 21st May 2024

Development & Refurb

Fast Finance

Rates from:

0.55% pm

Light & Heavy Refurb

Finance For Unmortgageable Properties

Land Purchase with planning

As at 21st May 2024

Residential

Large Bridging Loans

Rates from:

0.55% pm

Up to 80% LTV

Minimum Loan £500k

Minimum net income £100k

As at 21st May 2024

Contact Us

Thank You for your interest - please complete the form below and a member of our team will be in contact.

We are fast and professional and can help you meet a tight finance deadline. Call us on 0117 959 5094 to discuss your needs.

Book Consultation »

What is a Buy to Sell Mortgage?

A Buy to Sell Mortgage is a short-term financing option designed for property developers and investors who intend to purchase a property, renovate or improve it, and then sell it quickly for a profit.

It’s actually not a mortgage at all, but some people call it this because it’s a large loan used to purchase a property. If you’re considering buying a property to sell in the near future, a mortgage might not be the best option for two primary reasons:

Mortgages are long-term finance solutions, so it may be tricky to secure a mortgage on a property you plan to sell soon

Mortgages can take months to arrange, making it difficult to buy a property at auction or take advantage of other time-sensitive investment opportunities

Eligibility for residential mortgages is assessed on income, so if you want to dedicate all you time to refurbishing a property before selling it, you won’t have an income to secure a mortgage

For these reasons buy to sell mortgages are typically short-term solutions to match the nature of the property purchase.

The main funding method used to purchase a buy to sell is bridging finance, because it’s short-term, flexible and funds are typically released in a matter of weeks. With a bridging loan, funds are released quickly, allowing you to act like a cashbuyer. It’s usually repaid in a lump sum, so you can repay the loan when you sell the property, and you’ll only pay interest on the months the loan is unpaid.

Recent bridging loan deals we've secured for clients

Read through our 100+ bridging loan case studies, breaking down the details of how bridging loan transactions work in practice.

Bridging Loan to Fund Multiple Renovation Projects | Case Study
£950k Bridging Loan to Fund Multiple Renovation Projects
Area
Swindon
Capital Raised
£950k
Bridging Loan and Refinance Arranged for Large Self Build | Case Study
Bridging Loan and Refinance Arranged for Large Self Build
Area
Milton Keynes
Capital Raised
£225k
Bridging Loan with Multiple Drawdowns Secured for 18-Bed HMO Conversion
Bridging Loan with Multiple Drawdowns Secured for 18-Bed HMO Conversion
Area
Kent
Capital Raised
£1.2m
Case Study: Complex Bridging Loan for Spanish Villa in Just 6 Working Days
Complex Bridging Loan for Spanish Villa in Just 6 Working Days
Area
Staffordshire
Capital Raised
£1.48m
Case Study: 24 Month Bridging Loan Secured Against £23m London Home
24 Month Bridging Loan Secured Against £23m London Home
Area
London
Capital Raised
£6.5m
Fast Bridging Loan to Raise Deposit for a Larger Family Home
Fast Bridging Loan to Raise Deposit for a Larger Family Home
Area
London
Capital Raised
£215k

Why Clifton Private Finance?

We are bridging loan experts, and our advisers know the complex ins and outs of the bridging market. 

In fact, in 2022, we won two awards for our bridging service.

And we also won Bridging Broker of the Year 2023.

We can help you:

  • Decide if a bridging loan is right for you
  • Understand what type of loan best suits your situation
  • Feel comfortable with how the process works and what the costs will be

And when we've established the best type of bridging finance for you, we will:

  • Compare rates across the entire market
  • Negotiate the best deal for your circumstances
  • Guide you through the application process
  • Help you arrange your valuation(s)
  • Liaise with your solicitor to sort the paperwork
  • Chase through your application until the funds are in your bank account

Sam O'Neill

Sam O'Neill

Head of Bridging

Let us do all the hard work of finding the right bridging lender for your circumstances. 

We secure bridging finance for applications of all types, and we negotiate competitive lending to meet your needs and timescale.

View Profile »

Written bySam O'Neill & Sam Hodgson
Last Updated
: 23/05/2024

What Does Buy to Sell Mean?

"Buy to sell" is a property investment strategy where investors purchase properties with the intention of selling them quickly for a profit rather than holding them long-term. This approach typically involves improving the property through renovations or upgrades to increase its market value before selling.

The strategy focuses on short-term investment, often spanning a few months to a couple of years, and aims to maximise profit by leveraging the enhanced property value or favorable market conditions.

Success in "buy to sell" depends on accurately timing the market to buy low and sell high and may involve using financial products like buy to sell mortgages or bridge loans to fund the purchase and renovations.

This method is popular among property developers and house flippers who have the expertise and resources to quickly enhance and sell properties.

Watch our video below - Bridging Loans Explained: Costs, Timescales, Examples, & How To Get One:

Who Can Benefit from a Buy to Sell Mortgage?

Flipping Houses: Ideal for investors who buy properties at a lower price, renovate them, and sell them for a profit.

Developers: Useful for property developers needing short-term funds to complete construction projects before selling units.

A Buy to Sell Mortgage can benefit a variety of individuals and entities involved in real estate investment and development. Key beneficiaries include:

Property Developers

Those who purchase land or properties to develop and sell quickly can use this type of mortgage to finance their projects during the development phase.

House Flippers

Investors who buy properties with the intention of renovating and selling them at a higher price within a short period can leverage a buy to sell mortgage to cover purchase and renovation costs.

Property Investors

Investors looking to capitalize on short-term market opportunities can benefit from the flexibility and quick access to funds that buy to sell mortgages provide.

Construction Companies

Companies that build or refurbish properties for resale can use this mortgage to manage cash flow and finance ongoing projects until the properties are sold.

Auction Buyers

Individuals who buy properties at auctions often need immediate financing to secure the purchase and can use a buy to sell mortgage for this purpose.

Landlords Transitioning Properties

Landlords who want to quickly sell off a portion of their portfolio to reinvest in other opportunities or to renovate and sell underperforming properties can use this type of financing.

Small and Medium Enterprises (SMEs)

SMEs involved in property development or needing to quickly flip properties for business expansion can benefit from the short-term funding solutions offered by buy to sell mortgages.

These beneficiaries utilise buy to sell mortgages to gain quick, flexible funding that supports their short-term real estate projects, enabling them to capitalise on investment opportunities and market conditions efficiently.

How Do Buy to Sell Mortgages Work?

These short-term financing options are tailored for property developers and investors who purchase, renovate, and quickly sell properties for profit. Unlike traditional long-term mortgages, buy to sell mortgages typically span a few months to a couple of years and offer greater flexibility in repayment.

They usually come with higher interest rates and often require interest-only payments, with the principal due upon property sale. Lenders focus more on the potential post-renovation value of the property and the developer's plan and experience rather than the borrower's creditworthiness.

A clear exit strategy is crucial for approval, as lenders need assurance on how and when the loan will be repaid. This type of mortgage enables investors to access necessary funds quickly, making it ideal for house flipping or property development projects, though it involves higher costs and risks, necessitating a thorough understanding of the property market.

What Deposit Do You Need for a Buy to Sell Mortgage?

Generally, most buy-to-sell mortgages have a loan-to-value (LTV) ratio of around 70-75%, meaning you would typically need to provide a deposit of 25-30% of the property's purchase price. For instance, if purchasing a property for £200,000, you might need a deposit of £50,000 to £60,000.

If the property requires significant renovation or development, the lender might require a higher deposit, potentially ranging from 30-50% of the property's value.

Experienced property developers or those with a strong credit history might secure a mortgage with a lower deposit, whereas first-time developers or those with weaker credit may need to provide a larger deposit.

Market conditions also play a role, with lenders potentially being more lenient in stable or growing markets and more stringent in volatile or declining markets. Additionally, it's important to consider other costs such as legal fees, valuation fees, and refurbishment expenses.

Speaking directly with potential lenders or a mortgage broker who specializes in buy-to-sell mortgages is crucial to get specific advice tailored to your situation and current market conditions.

Two Key Reasons You Might Use a Buy to Sell Mortgage

Property developers and homeowners can find themselves in situations where they need a specialist short-term finance solution in order to sell a property. You may be wanting to buy a property to do-up-and-sell in a short time-frame. Or you may be wanting to buy-before-you-sell.

In both cases, the funding solution may be bridge finance, or bridging finance: a form of short-term property lending that bridges a finance gap between one situation and its long-term resolution, or "exit."

Bridging finance is flexible, quickly-arranged, and less dependent on your personal financial circumstances than conventional long-term mortgages.

Here’s how it could work for you:

buy to sell mortgage

Buying to sell

  • A straightforward "flip": in a rising market, if you’ve identified an opportunity to buy a property you believe is significantly underpriced, and will return a reasonable profit.
  • A "fix-and-flip": if you have an opportunity to buy a property which will make a good return after light refurbishment (updating a bathroom or kitchen, or doing some decorative work).

In situations where it’s clear you don’t intend to own the property long-term, standard buy-to-let mortgaging won’t be appropriate for you:

  • Early exit fees will make a big dent in your profit
  • Lenders won’t agree to it

Bridge finance may also be a significant help to you in protecting cash flow if, for instance, you already own a number of properties on which you’re paying mortgages. An important feature of this kind of short-term finance is that the monthly interest can be "rolled up" into the loan, to be repaid at the end of the loan period (see below for how bridging finance works).

buy to sell mortgage

Buy before you sell

Ideally, when we move house or buy an investment property we would sell our current property first and use the money to fund the purchase without any need for interim finance. But there are a number of situations in which this isn’t possible, or desirable:

  • You’ve already found the property you want, and you don’t want to miss out to another purchaser.
  • The property you want needs refurbishment and you don’t want to live amongst the disruption, or have the expense and upheaval of moving into rental property in the meantime.
  • The property market is slow and it could take quite a few months for your current home, or investment property, to sell: you don’t want to feel pressured into accepting a price below current market value.
  • You current property needs some work before it will achieve its full market value and you need funds to pay for the work before you put it on the market.

Bridging loans are normally offered for a maximum of 12 months, although longer loan terms may be possible depending on your circumstances. They can be set up more quickly than standard mortgages which have to fit into the cycle of review and approval of their underwriters.

You will usually have to pay an arrangement fee for taking out a bridging loan and there may be an exit fee when the loan is repaid (depending on the lender).

Interest is normally charged monthly, although you may have the option to roll up the interest and pay it all in one go along with the capital when the loan term ends. Alternatively, you may be able to borrow extra to cover the interest with this added to the total capital you repay at the end.

Use our bridging loan calculator below to get a quick cost estimate.

buy to sell mortgage

 

What Are The Eligibility Criteria for a Buy to Sell Mortgage?

The eligibility criteria for a buy to sell mortgage, also known as a bridging loan or property development loan, can vary among lenders but generally include the following key factors:

  • Credit History - A good credit history is often required. Lenders will check your credit report to assess your reliability in repaying loans.
  • Experience - Having experience in property development or buy-to-let investments can be advantageous. Some lenders may prefer borrowers who have successfully completed similar projects.
  • Deposit - You must provide a substantial deposit, typically around 25-30% of the property's purchase price. This can be higher depending on the property's condition and the project's risk.
  • Property Type and Condition - The property you intend to buy and sell should meet the lender's criteria. Properties requiring extensive renovation may have different requirements than those in good condition.
  • Exit Strategy - A clear exit strategy is crucial. Lenders need to know how you plan to repay the loan, whether through selling the property, refinancing, or another means.
  • Valuation and Survey: A professional valuation and survey of the property are usually required to assess its current and potential value post-renovation.
  • Security: The property itself often serves as security for the loan. Lenders will evaluate its potential resale value and marketability.

Compliance with legal requirements or planning permissions for property modifications is also essential. Lenders will want to ensure that the project adheres to local regulations.

How to Repay a Buy to Sell Mortgage

When you take out this type of short-term finance, you will usually have to agree your exit at the outset: that is, specify exactly how it will be repaid.

  • If you’re using the bridging finance for a straightforward buy-to-sell, your exit will be the sale of the property.
  • If you’re using the finance to buy a new property before a current one is sold, you will generally either be repaying with the proceeds of selling your previous property, or by taking out a standard mortgage once the previous mortgage is paid off.

More details: How much does a bridging loan cost

How to Fund a Buy to Sell Property

When making any significant financial decision, especially regarding a property loan, it's always best to seek the help of a financial expert. This will ensure you're getting finance at an affordable and favourable rate.

At Clifton Private Finance, we have an award-winning bridging team dedicated to driving results. We have relationships with lenders across the whole bridging market and have access to the best deals. Our bridging brokers can guide you through the process and liaise with lenders on your behalf.

To see what we can do for you, call us on 0117 205 4838 or book a free consultation below. 

 Book Consultation »

 

Bridging Loan Award 2023

Bridging Loan Awards 2022

FAQs

Do you need a valuation for a bridging loan?

Yes, a valuation is typically required for a bridging loan in the UK.  

Since bridging loans are often secured against a property or other valuable assets, lenders will want to assess the market value of the property being used as security. This helps the lender determine how much deposit they want you to provide based on the value and condition of the property. 

How much can you borrow with bridging finance?

You can borrow up to £25m with bridging finance, but it’s typically capped at about 80% of the value of the property you’re using as security. 

It's important to note that different lenders have varying policies and criteria regarding the maximum loan amounts they offer for bridging finance. Some lenders have a maximum limit of over £1 million, while others may specialize in smaller loan amounts. 

Additionally, the terms and conditions of the loan, including interest rates and fees, should also be taken into consideration when determining the overall affordability of the bridging loan. 

Do you need a deposit for a bridging loan?

Yes, you typically need a 20-40% deposit for a bridging loan. 

It can be possible to get a bridging loan without a deposit (a 100% bridging loan), but you’ll need other assets in the background to secure the loan against, and more stringent criteria and higher costs could apply. 

Can I get 100% bridging finance?

Yes, it is possible to get a 100% bridging loan (also known as a 100% LTV bridging loan), but it is rare. This means that you won’t need to put down a deposit and can borrow the full value of your property.  

However, the criteria for these loans can be hard to meet, and you’ll need to provide additional assets as security for your loan. 

Interest rates and fees can also be higher to compensate. 

Does a bridging loan make you a cash buyer?

While using bridging finance doesn’t technically make you a cash-buyer, it can allow you to act like one.  

Mortgages take months to process, often leading to an ‘onward chain’ where all parties involved need to wait for funds to be transferred 

Bridging finance can usually be accessed a lot quicker than mortgages so you can bypass the onward chain, giving you an advantage over other buyers and being attractive to sellers.

What is the longest bridging loan term?

Bridging loans typically have a term of 12 months, but some lenders are willing to stretch their terms to 18 months, or even 2 –3 years depending on the case. 

Terms longer than 2 years will usually only be considered for specific cases.  

Can I use a bridging loan to pay stamp duty?

Yes, you can use a bridging loan to pay Stamp Duty.  

This amount could be covered by a bridging loan, providing you have a way to repay the additional borrowing amount to your lender.  

Are bridging loans safe?

Yes, bridging loans are safe when they’re used in the right circumstances with a solid repayment strategy. However, we recommend speaking to a qualified advisor, like our brokers at Clifton Private Finance, before you take out a product. 

The main factors to consider with bridging finance are that the full loan amount will usually need to be repaid within a year, and like a mortgage, it is secured against a property as collateral. 

This means that in the case that you aren’t able to repay your bridging loan, your property would be at risk of repossession.  

But with a watertight exit strategy, bridging finance can be an efficient way to secure property quickly. 

Can an 80 year old get a bridging loan?

Bridging loans are designed to be short-term so there’s no maximum age limit when applying for a bridging loan. This does depend on the lender, as some bridging lenders do have an upper age limit, but there are lenders on the market who offer bridging loans for borrowers aged 70 and over. 

What is the monthly interest rate on a bridging loan?

Bridging loan interest rates usually range between 0.45% - 2% per month, depending on the case and the market rate.

Unlike mortgage interest rates, bridging loan interest is calculated monthly instead of yearly.

This is because bridging loans are short-term and, in many cases, repaid within a year. Bridging loans can be arranged without early repayment penalties, so interest is calculated monthly to ensure you only pay interest on the months you have the loan for.

Do banks still do bridging loans?

Unfortunately, mainstream banks in the UK don’t offer bridging loans.

This means that if you’re looking for a bridging loan, you won’t be able to get one using a lender you’d find on the high street.

There are a variety of specialist lenders that offer bridging loans, but because these lenders are smaller and more niche, you may need a bridging broker to access them.

How much do banks charge for bridging loans?

Banks typically charge two main fees when taking out a bridging loan – arrangement fees and interest.

But there are other costs to consider such as valuation fees, broker fees and administration fees.

Costs can vary from lender to lender, and will also depend on what your bridging loan is for (e.g., residential or commercial purposes.)

Arrangement fees are what the lender charges you to take out the loan and can range between 1.5 - 3% of your overall loan. Bridging loan interest, on the other hand, is calculated monthly. This can catch borrowers out who may be expecting an Annual Percentage Rate (APR) like with a mortgage.

Can you turn a bridging loan into a mortgage?

Yes, you can convert a bridging loan to a mortgage through refinancing, and it is common among borrowers who use bridging finance to buy residential properties.

However, whether or not you’ll be able to refinance to a mortgage is dependent on your financial circumstances, the lender, and the property you’re planning to buy.

It’s important to be sure that refinancing is a viable repayment option before you take out a bridging loan on a residential property.

Is a bridging loan more expensive than a mortgage?

Yes, bridging loans are typically more expensive than mortgages.

Bridging loan interest rates can be much higher than a mortgage, and are calculated and displayed as monthly rates instead of the usual annual percentage rate (APR) that you’ll see on a mortgage.

However, bridging loans are a short-term solution, and you’ll only pay interest on the months you’ve borrowed money for – and you can repay early without any charges (for most loans).

There are many circumstances where bridging loans are an affordable option and a means to an end - for borrowers that need to finance a property purchase quickly, it may be the only option available.

How are bridging loans paid?

The two most common ways to pay a bridging loan are to sell a property or refinance to a mortgage.

You may also need to ‘service’ the loan through the term, which means paying the interest monthly. However, you can opt to ‘roll up’ your bridging interest to be repaid at the end along with the capital.

There are also other ways to repay a bridging loan, such as selling a business or even using money from an inheritance.

The method in which you pay your bridging loan can be flexible, just as long as it is clear in your application that you have a surefire way to repay your loan when the terms are up.

What is the minimum deposit for a bridging loan?

In most cases, a bridging loan will require a minimum deposit of 25%. However, the minimum can vary depending on the lender and the specific circumstances of the loan itself.

Generally, bridging loans are secured against a property or other valuable assets, and the deposit required is often expressed as a percentage of the property's value, known as the loan-to-value ratio.

In some cases, 0% deposit bridging loans are an option, but only if you have other property or assets in the background to provide additional security.

Do you pay monthly payments on a bridging loan?

No, typically, you’ll repay a bridging loan in one chunk at the end of the loan term. Bridging loans are a form of short-term finance and will usually need to be repaid within 12 months, but there can be room for flexibility.

In some cases, borrowers may be required to make monthly interest payments. This means that each month, you would pay the interest accrued on the loan amount while the principal amount remains outstanding until the end of the loan term.

But usually, the interest is "rolled up" or added to the loan balance and paid with the rest of the loan at the end of the term. This option can help protect your cashflow so you can spend it on moving costs or refurbishments, for example.

How long does it take for a bridging loan to come through?

Bridging loans can be arranged in as little as 7 working days.

However, it depends on the complexity of the bridge loan and your specific circumstances. It may also be more expensive for you to rush an urgent application through – but not impossible.

Bridging loans are a popular option for borrowers who are under time constraints, such as buying a property at auction or breaking a chain.

What is the criteria for bridging finance?

The key factors lenders tend to consider are:

Security - Bridging finance is usually secured against property or other valuable assets. Lenders will assess the value and marketability of your security.

Exit Strategy - Lenders will want to understand how you plan to repay your bridging loan. In most cases, this is selling your old property, selling the new property (flipping), or refinancing with a long-term mortgage.

Loan-to-Value (LTV) Ratio - Lenders consider the loan amount compared to the value of the property being used as security as a percentage. The LTV ratio can vary, but most lenders will have a maximum of 60-80% LTV.

Remember, the criteria for obtaining bridging finance in the UK can vary depending on the lender and your circumstances.

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