What is a Buy to Sell Mortgage?

Flipping a property sounds straightforward enough: buy it cheap, do it up, sell it fast. But unless you’re sitting on a hefty pile of cash, you’ll probably need help funding the purchase. That’s where a buy to sell mortgage comes in.

These short-term mortgages are designed for exactly this situation. They let you buy a property, make the improvements you want, then sell it on, without having to keep the mortgage for decades. But they work a little differently from your average high street mortgage. In this guide, we’ll cover how they work, what lenders look for and how to decide if it’s the right route for your next investment.

Buy to sell mortgages explained

A buy to sell mortgage is a short-term loan aimed at people who plan to purchase a property, improve it and sell it quickly for a profit. It’s often used by property developers, investors and landlords, but it’s not just for the big players.

Sometimes called a “short-term mortgage” or “flipping mortgage”, these loans are usually interest-only and last 6 to 24 months. You won’t find them from your average high street bank as they tend to come from specialist lenders.

How does a buy to sell mortgage work?

Unlike a typical residential mortgage, which might run for 25 years or more, a buy to sell mortgage is designed for quick turnarounds. The property acts as security, and you usually only pay the interest during the term. When the property is sold, the mortgage is repaid in full.

Let’s say you find a fixer-upper for £100,000. You put down a 25% deposit, borrow £75,000 and spend £20,000 on renovations. After six months, you sell the house for £160,000. Once the loan is repaid and fees are covered, the remaining profit is yours.

Because these mortgages are short-term and higher risk for the lender, the rates are often higher than with standard mortgages. But for the right project, they can still be well worth it.

What kind of properties can you buy with this mortgage?

One of the big plus points of a buy to sell mortgage is that you can use it to purchase properties that standard lenders might reject.

That includes:

• Homes with no kitchen or bathroom
• Uninhabitable or derelict properties
• Auction buys that need fast completion
• Properties with structural issues

Lenders are usually more interested in your exit strategy and plans for the property than in its current state. As long as the deal stacks up and you can show how you’ll add value, you’re in with a shot.

What’s the typical buy to sell mortgage deposit?

You’ll usually need a bigger deposit than for a residential mortgage. Most lenders want at least 25% of the property’s purchase price, sometimes more.

That’s because short-term property deals come with higher risk, and lenders want to protect themselves in case the sale falls through or takes longer than planned.

So if you’re eyeing a property priced at £180,000, expect to put down around £45,000 to £50,000 as a deposit.

What are typical buy to sell mortgage rates?

Rates on buy to sell mortgages tend to be higher than on standard residential deals. Depending on the lender and how risky they think your deal is, you might see interest rates between 0.6% and 1.5% per month.

That may not sound like much, but because it’s charged monthly rather than yearly, it adds up fast. Still, if the margins are strong, the returns can outweigh the cost.

Some lenders charge arrangement fees too, often around 1% to 2% of the loan. You’ll need to factor that in when you’re crunching numbers.

What do lenders look for?

Lenders aren’t just looking at the property…they’re looking at you! They’ll want to know:

• Your experience with property flips or renovations
• Your credit history
• Your exit strategy (as in, how you’ll repay the loan)
• Whether your costs, timeline and resale price seem realistic

Some lenders will work with first-timers, especially if you’ve got a solid plan and a good team behind you. But if this is your first project, expect a bit more scrutiny.

Speaking of exit strategies, bear in mind that if you make a profit when you sell, you may need to pay Capital Gains Tax. This applies when the property isn’t your main home and can take a bite out of your return. You’ll want to factor this into your sums from the start. 

Can I use a buy to sell mortgage as a first-time buyer?

In theory, yes, but it’s not easy. Most lenders want to see some experience in property renovation or investment.

If you’re new to the game, you might need to team up with someone who’s done it before, or work with a mortgage broker who knows which lenders are more flexible.

You’ll also need to show that you’ve got the funds and support in place to see the project through. That includes everything from your builder and surveyor to your estate agent and solicitor.

Are there alternatives to a buy to sell mortgage?

Yes. If a buy to sell mortgage doesn’t suit your needs, you could look at:

• Bridging loans: short-term finance with faster approval, often used to plug gaps between buying and selling
• Auction finance: designed for properties bought at auction, with quick turnaround times
• Refurbishment loans: for properties needing a bit of work, but not a full flip

Each comes with its own costs and risks, so make sure you understand the small print.

What if I can’t sell the property?

Buy to sell mortgages can be a smart move, but they come with a lot of pressure. If your property doesn’t sell in time, you might be able to extend the mortgage or switch to a longer-term product. But that often means extra fees, higher interest and potential penalties.

That’s why it’s crucial to have a plan B. You might choose to rent it out for a while or drop the asking price to speed things up. But sometimes, even the best-laid plans hit a wall: buyers pull out, sales stall or you just need the cash fast.

That’s where we come in. At Sell House Fast, we buy homes across the UK, often in just a matter of days, with no agents, no fees, no viewings. You’ll get a fair cash offer based on real-time market data, and we’ll sort the paperwork so you can move on with confidence.

Our process is quick, personal and fully transparent and backed by years of experience, plus we follow the high standards set by The Property Ombudsman.

If your flip’s nearly finished and the clock’s ticking, or you’re looking for a clean exit, we’re here to help, so why not get a free cash offer today?