Short term mortgages: Discover if they are the right option

A short term mortgage will cost you less in the long run, but the monthly repayments are higher.

Check eligibility for a mortgage

  • Free online mortgage broker
  • Mortgage in principle in 15 mins
  • Low interest rates
  • Free expert advice

A short term mortgage is a great idea – if you can afford it.

You’ll pay a lot less interest and will be able to become mortgage-free quicker. The main disadvantage is that the monthly repayments will be a lot higher.

Realistically, you’ll only be able to afford the repayments on a short term mortgage with a small loan-to-value ratio. Many of those opting for short term deals will have either saved a huge deposit or are selling a home they’ve built a lot of equity in.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

How to find the best short term mortgage deal

Most mortgage lenders have a minimum term (usually between three and five years) and a minimum borrowing amount on their traditional mortgage products. If these terms aren’t suitable, explore lenders that specialise in short term deals.

As with any mortgage product, the lender’s biggest priority is that you can comfortably afford the monthly repayments. You may want to use a professional mortgage advisor to find the most suitable deal for your needs. These individuals have specialist knowledge of the mortgage market and will be able to point you towards the most affordable deals that suit your circumstances.

Alternatives to short term mortgages

If you can’t find a suitable short term mortgage, consider these alternatives:

  • Personal loans. It’s possible to secure a personal loan against a property. However, the maximum amount on these products tends to be too small to finance most property purchases.
  • Bridging loans. Bridging loans are quicker to organise than mortgages and can be secured against uninhabitable properties, but they have huge interest rates. They are typically used to finance purchases that buyers are looking to sell quickly at a profit. This process is called “flipping”.
  • Buy-to-sell mortgages. This is a product for those looking to “flip” properties.

Summary: What are the pros and cons of short term mortgages?

Pros

  • Cheaper than a long term mortgage.
  • Lower interest rates than a bridging loan.

Cons

  • Bigger monthly repayments than a long term mortgage.
  • There are more terms to meet than for a bridging loan.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

More guides on Finder

  • Monzo review: Is it worth it?

    Is Monzo’s app-only current account the right option for you? Read our review to get the low-down on all of the features of the account, its card and the app.

  • What is a good credit score?

    Find out the difference between a credit score and a credit report, plus the factors that can push your score up and down.

  • Agricultural mortgage

    What you need to know about getting a mortgage if you’re buying or refinancing a farm or farmland, including the factors lenders consider when you apply for one.

  • Mortgage for a pub

    Everything you need to know about taking out a mortgage to buy or refinance a pub. Find out where to get one, how to get the best deal and the factors lenders consider.

  • Mortgage for a hotel

    In-depth guide to taking out a commercial mortgage to buy or refinance a hotel. Find out how to get the best rates, factors lenders consider and what you need to apply.

  • Bridging loan vs commercial mortgage

    Find out if a bridging loan or commercial mortgage would suit you if you’re buying or refinancing commercial property and when a bridging loan can be a better option.

  • How much deposit do I need for a commercial mortgage?

    Find out how much deposit you need if you’re taking out a commercial mortgage, including the factors lenders take into account, and how to get the best deal for you.

  • Getting a 5% deposit mortgage under the government’s new guarantee scheme

    Learn more about the new government scheme that allows first-time buyers and home movers to get on the property ladder.

  • Chain break finance

    Learn everything you need to know about chain break finance – a type of bridging loan that stops you losing your dream home if the sale of your existing one falls through.

  • Fix and flip

    Read our in-depth guide to fix and flip and how this type of property investment works, including the factors you need to consider, the risks to be aware of and how to finance it.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked
Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site