Buy-to-sell mortgages: Compare rates and check eligibility

Buy-to-sell mortgages are a short-term finance arrangement for buying property with the intention of selling it. Compare rates and find the best deal for you.

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Compare buy-to-sell mortgages (bridging loans) and rates

Table: sorted by monthly interest rate
Data indicated here is updated regularly
Name Product Maximum LTV Loan term Loan amount Monthly interest rate
United Trust Bridging Loan
United Trust Bridging Loan
70%
1 month to 36 months
£75,000 to £25,000,000
0.48% to 1.1%
Hope Capital Bridging Loan
Hope Capital Bridging Loan
75%
3 months to 24 months
£50,000 to £500,000
0.54% to 1.05%
Octane Bridging Loan
Octane Bridging Loan
65%
1 month to 24 months
£150,000 to £25,000,000
0.55% to 1%
Lend Invest Bridging Loan
Lend Invest Bridging Loan
75%
3 months to 24 months
£75,000 to £25,000,000
0.55% to 0.94%
MFS Bridging Loan
MFS Bridging Loan
75%
3 months to 18 months
£100,000 to £0
0.65% to 1.25%
Octopus Bridging Loan
Octopus Bridging Loan
60%
1 month to 24 months
£50,000 to £25,000,000
0.7% to 0.9%
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Compare up to 4 providers

Overall representative example for regulated bridging loans
If you borrowed £214,000 over a 1-year term at 8.96% p.a. (fixed), you would make 12 monthly payments of £1,628.48 and pay £233,541.76 overall, which includes interest of £15,441.76, a broker fee of £0.00 and a lender fee of £4,100. The overall cost for comparison is 11.5% APRC representative.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

What is a buy-to-sell mortgage (bridging loan) and why would I need one?

In the UK, it’s possible to make a lot of money from buying property and then selling it quickly at a profit. The process is called “flipping”.

There are plenty of investors or amateur developers who make a lucrative career out of it – many will buy properties below market value at auction, or buy and renovate an uninhabitable property to sell on.

However, if you can’t buy the property outright using cash, then you will need a type of borrowing specifically designed for this kind of short-term property purchase.

This type of finance is called a buy-to-sell mortgage or a bridging loan (both terms refer to the same thing). You may also hear it being described as auction finance (because it is so often used to buy auction properties).

What is the difference between a buy-to-sell mortgage (bridging loan) and a traditional mortgage?

There are various reasons why you should not or could not use a traditional mortgage in a buy-to-sell situation:

  • With a traditional mortgage, you may have to own the property for a minimum time period before being allowed to sell it (which wouldn’t be suitable for property flipping).
  • You would pay big early repayment charges with a traditional mortgage (again, it’s likely you’ll be selling the property on quickly, so that would not be good news).
  • It may take too long to finalise a traditional mortgage (and often you need to move quickly to snap up a bargain property, or only have a short payment window to pay for an auction property).
  • You can’t secure a traditional mortgage against uninhabitable property (for example, if you buy a wreck at auction).

Whereas most traditional mortgages will charge fees for early repayment and make you wait at least six months before selling a property that you’ve just bought, a buy-to-sell mortgage (or bridging loan) doesn’t have these restrictions.

One of the other big advantages is that this type of finance can be secured for both habitable and uninhabitable property. Uninhabitable conditions can range from parts of the roof or walls being missing, to where there’s no working kitchen, bathroom or heating, which can be the case with some auction properties.

These loans can also be finalised quickly – in a matter of days or weeks – and are usually available with or without an end date, giving property flippers greater flexibility.

And rather than monthly instalments, you’ll likely pay off the loan and any interest in one lump sum – either at the end of the loan term of when you come to sell the property.

Given the short-term nature of the borrowing, the interest rates on offer for buy-to-sell mortgages (bridging loans) are likely to be a lot higher than for traditional mortgages. In fact, you may see them advertised at monthly rates, rather than as an APR.

You can also expect to pay higher product fees and have to stump up a larger deposit to buy a property. But if you’re looking to flip a property quickly, a buy-to-sell mortgage is still likely to be the most suitable type of loan.

Example of using a buy-to-sell mortgage (bridging loan)

An overall representative example for regulated bridging loans
Based on borrowing £214,000 over 1 year
Interest rate 8.96% p.a. (fixed)
Lender fee £4,100
Overall cost of comparison 11.5% APRC
Broker fee £0.00
Total amount repayable £233,541.76 inc. interest of £15,441.76

Do banks offer buy-to-sell mortgages (bridging loans) or do I need a specialist lender?

Mainstream lenders and big high street banks don’t tend offer buy-to-sell mortgages (bridging loans). They are quite niche products, so it’s likely you’ll have to go to a specialist lender.

It may also be worth approaching a mortgage broker who specialises in this area of property financing, as they may be able to help you access lenders offering these types of products.

Bank’s policies regarding buy to sell mortgages

We contacted the banks below to ask if they offered buy to sell mortgages (bridging loans) and collected the responses.

Provider Policy regarding buy to sell mortgages
Nationwide Not offered
HSBC Not offered
RBS Not offered
Lloyds Bank Not offered
Santander Not offered

Tips on how to be approved for a buy-to-sell mortgage (bridging loan)

To be eligible for these types of finance deals, you’ll usually need to already have 25% of the property’s value as a deposit. The larger the deposit, the more likely you’ll be approved for a good interest rate.

You can also improve your odds of getting a great mortgage deal by demonstrating the following qualities:

  • A strong exit route. You’ll be questioned extensively about your exit route. Typically, this will involve remortgaging or selling the property. If your project involves refurbishment, the lender will usually want to see evidence that your plans are realistic. The more reliable your exit route appears, the easier it will be to get a good mortgage deal approved.
  • A good security property. The easier the property looks to sell, the more comfortable a lender will be with approving your loan. If the property is already inhabitable, that will work in your favour. If there are no hurdles to a smooth sale, such as leaseholds or non-standard construction, that’s a good sign too.
  • A good credit score. Lenders will use your credit score to assess how reliable you are when it comes to repaying debt. A good score may allow you to access the best rates. If your exit route involves remortgaging, they’ll be particularly keen to check that your credit score will allow this.
  • Experience in property flipping. If you can demonstrate experience of having successfully used these mortgages to flip properties in the past, the lender may be more comfortable approving your application.
  • Using a mortgage adviser. A mortgage adviser with specialist knowledge of this market will be able to point you in the direction of the best interest rates from the lenders most likely to approve your application.

Pros and cons of buy-to-sell mortgages (bridging loans)

Pros

  • Suitable for buying auction properties or property flipping
  • Can be agreed in a quick timeframe
  • Finance can be secured against uninhabitable properties
  • Don’t have the same early repayment fees as a traditional mortgage
  • Less restrictions on selling the property soon after purchase

Cons

  • Higher interest rates and product fees
  • Typically repayable in one lump sum (an issue if you don’t manage to sell the property to repay the loan)
  • Specialist products that are not usually available from mainstream lenders

Other finance options for buying and developing property or land

There may be particular scenarios where a buy-to-sell mortgage (bridging loan) isn’t exactly what you need to finance your property venture.

In those instances, check out our guides to getting a mortgage or loan to buy a piece land or finance a self-build property.

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