Home Finance Make Your First Property Investment Profitable with a Buy to Sell Mortgage

Make Your First Property Investment Profitable with a Buy to Sell Mortgage


As you search for investment advice, you’ll quickly realise that  few opportunities are quite as powerful as property investment. Despite the ups and downs the property market has experienced since the COVID-19 lockdowns, property investment provides UK individuals with multiple opportunities you just can’t find with other possible investment strategies. As with any investment, you’ll need to do your research to get started, but one of the best ways to make sure your initial investment is a profitable one is to use a Buy to Sell mortgage to make the purchase.

What is a Buy to Sell Mortgage?

If you’re unfamiliar with the terminology, this is essentially a kind of loan you use to buy a property at a good price, then turn around and sell it for a higher price. You wouldn’t want to use a traditional mortgage for this type of purchase because lenders attach early repayment charges to a loan that can be quite high. Moreover, you’ll typically find a clause in a traditional mortgage that means you cannot sell within six months of purchasing the property. Because of factors like those, Buy to Sell mortgages are a much better option for those looking for a simple investment.

Your Choices Within the Buy to Sell Market

As with traditional mortgages, even within the Buy to Sell market for mortgages, you have a number of options. The most popular one is called a bridging loan. These are great for investors who are looking to flip a property within the first twelve months after they’ve made the purchase. A bridging loan typically has a fairly high interest rate, which is why it’s only suitable for those looking to sell quickly, but it can be used to buy a property that is considered to be unmortgageable by most traditional lenders. What’s more, though, is the fact that this kind of loan doesn’t usually come with early redemption charges or any clauses that suggest you’ll have to wait six months before you sell the property.

If you are buying a property that needs quite a bit of work and wouldn’t be considered by traditional lenders, you may want to consider a refurbishment mortgage. Traditional lenders want properties that can be occupied immediately. They need to have running water and no serious problems like subsidence to qualify for this kind of loan. These properties often come at a serious bargain for investors, though, because they’re problematic. A refurbishment mortgage is a loan specifically designed for a property like this one. Typically lenders offer both light and heavy refurbishment loans, depending on what must be done to the property to make it habitable again. The loans are usually assessed on the potential value of the property after you’ve completed renovations, so that allows you to borrow a bit more than you might be able to with some loans. Typically you can borrow up to 75% of the property’s value after refurbishment with this kind of loan, and the rates are usually similar to bridging loans.

Flexible mortgages are the final type of mortgage available. These are a more traditional loan, but they don’t usually have early repayment fees attached. That allows you to sell the property at any point in the process without having to wait for the mortgage term itself to expire. They can be used for properties that you intend to flip or properties that you intend to let. With this type of loan, though, you will have to make certain that the property is habitable, as anything that needs extensive work simply won’t qualify.

Getting a Buy to Sell Mortgage

As with any mortgage, these kinds of loans do have various criteria attached if you wish to qualify for the loan. You’ll need to have a fairly strong credit history and at least 25% of the money ready to deposit to get the loan. You’ll also need a good exit strategy in place so the lender knows exactly what you intend to do once you’ve finished working on the property.

Where to Get a Buy to Sell Mortgage

If you’re ready to make your first property investment, your best bet is to look to specialist lenders or a mortgage broker to help you connect with a mortgage like this one. There are high street banks that offer this type of loan, but it’s a bit more complex than working with a specialised lender.

It’s Time to Invest!

If you’re ready to join the property investment market, these mortgage options are the perfect way to do it. Contact your lender or mortgage broker to learn more.


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