Buy to sell mortgage

There are many investors who have experience building capital from buying and selling houses. Usually, they will be monitoring the marketplace to find houses that are BMV (below market value) with good potential to renovate and sell for a higher price. Generally, sellers of these types of properties will want a quick sale. This is regularly the case when a person has inherited a property following a relative passing away or at Auction.  In these instances, sellers can be more willing to sell below the market value.

As long as you plan well, do your research, have money for the deposit and have the additional funds to invest into the renovation, then buy to sell properties can be good investments.

Knowing what mortgage product is best depends on your situation. More specifically, how quickly you want to buy and sell a property. If you’re looking for a turnaround within a matter of months, a more complex product may be required than mainstream lenders can provide. If you’re not looking to ‘flip’ a house as quickly or perhaps intend to live in the property or rent it out, a standard mortgage may work for you.

In addition, the level of work required to the property may dictate the type of mortgage product required. If a house is deemed inhabitable, or in need of extensive work, a specialist mortgage is more likely to be required.

High street or mainstream lenders tend to stick to simpler mortgage cases. This allows them to keep their products and fees more rigid and manageable but doesn’t cater for more complex cases. This is where specialist lenders can help. They may be less well known but are certainly no less reputable than more well-known lenders.

When looking to buy a property quickly, there are instances where residential mortgages may be a viable option. Provided the property is habitable and you will live there on completion, a residential mortgage could work. However, if the property isn’t habitable, a specialist mortgage or bridging loan is more likely to be relevant. If you aren’t to be moving in, you may need a buy to let mortgage (see below).

It depends on how quickly you wish to sell. Residential mortgages carry lower interest rates than bridging products but are far less flexible. Early repayment charges (ERCs) often make them unsuitable for getting out of quickly or cheaply, although there are some residential mortgage products with no ERCs, but these are likely to carry higher interest rates.

Buy to let (BTL) mortgages are suitable for investors looking to buy a property, without planning on living in the property themselves. Similar to a residential mortgage, the property needs to be habitable. The only difference is that it is not you living in the property upon completion. The same issues apply with regards to entry and exit fees or restrictions. These may bring into question how appropriate this type of mortgage is. It again depends on your intentions, and how quickly you intend on buying and selling.