What is a Buy to Sell Mortgage?
Estimated reading time 10 minutes
A buy to sell mortgage is a short-term, interest-only bridging loan used by borrowers to buy, renovate or improve a property before selling it for a profit. The loans are typically paid back within weeks or months rather than years. You will often see buy to sell and bridging loans referred to as the same thing, and whilst they are the same product, buy to sell is the end goal, the bridging loan is what helps you get there.
Intrigued? We’ll explain exactly how they work, who they are for and what they may cost here.
Buy to sell mortgages: Key takeaways
| What is it | Short-term, interest-only bridging loan for buying a property and selling it within weeks or months |
| Who is it for | Property investors, auction buyers, homeowners needing to buy before they sell, those who have inherited property but have no plans to keep it and need to renovate it before they can sell. |
| Typical term | Varies but can range from one or two months to two years. |
| What lenders assess | Your plan to repay the loan rather than your income. |
| How much deposit | Higher than standard residential mortgages. 20% minimum is common. Sometimes security on another property is used instead of cash. |
| Costs and risks | Higher interest rates, potential high fees, smaller pool of lenders, risk of losing the property if the exit plan doesn’t work. |
What are buy to sell mortgages for?
Buy to sell mortgages are commonly taken by property investors who wish to purchase a property, then sell it soon after. Typical residential mortgages don’t allow for this, leaving investors who may not have access to enough cash needing alternative ways to finance their property plans.
They are also popular options for those who have inherited property, have no plan to keep it, but need to renovate it before being able to sell it at a profit.
Those buying at auction may also want to secure a buy to sell mortgage. Auction purchases usually have to complete within 28 days of the hammer falling, much quicker than a standard mortgage can be arranged. As a result, the speed of bridging finance makes it well suited to auction buyers, who can purchase the property, improve it and sell it on.
Finally, some homeowners may wish to buy a house before they sell their existing one. If something desirable has come on the market, it may need to be snapped up quickly. A bridging loan enables this to happen and is then repaid upon the sale of the other property.
How does a buy to sell mortgage work?
A buy to sell mortgage, or bridging loan, works by “bridging the gap” between the funds available and the outstanding amount to purchase the property.
They are interest-only loans with repayments often made at the end of the term in a lump sum rather than monthly. This will vary by lender and the bridging loan taken out. We’ll cover these a little further down the page.
One of the key aspects of a buy to sell mortgage is the process of obtaining one. Where a typical residential mortgage requires you to prove your income, a buy to sell mortgage lender wants to know your strategy. They want to know how you plan to repay the loan and how quickly you will repay it. This could be achieved by using the loan to flip the property, make a tidy profit and pay back the mortgage. It could be that you are waiting for funds to clear from another property sale or for an inheritance to come through. Either way, if the lender sees that you have a clearly defined strategy to pay it back, they are more likely to approve your application. The only problem is that if you can’t pay it back, you might lose the home. Whilst this is still the case with a residential mortgage, you may have twenty-five years to pay that back, and lenders may be more accommodating in helping you. With a buy to sell mortgage, you only have a few weeks or months to clear the debt.
There are two main types of bridging loans used for buy to sell mortgages.
Open bridging loan
An open bridging loan is a short-term loan with no fixed repayment date but a deadline by which the debt must be cleared. This is normally around a year but some lenders do offer longer terms.
Closed bridging loan
A closed bridging loan has a fixed repayment date and is normally chosen when you already have a buyer lined up.
| Open bridging loan | Closed bridging loan | |
| Repayment date | No fixed date, but a deadline by which the debt must be cleared | A fixed repayment date, agreed at the outset |
| Typical term | Usually within 12 months but some lenders may offer longer | Tied to a known completion date |
| Best for | Situations where the exit (a sale or incoming funds) is not yet confirmed | When a buyer is already lined up and you are waiting on completion |
| Cost | Generally more expensive, reflecting the added flexibility | Usually cheaper as the lender has more certainty on repayment |
What is a first charge or second charge bridging loan?
A bridging loan is secured against the property, and the lender takes what’s known as a “charge” over it. If the property used as security is owned outright with no existing mortgage, the bridging loan takes priority and is a first charge loan.
If there is already a mortgage on the property, the bridging loan sits behind it as a second charge. This means that the existing lender is repaid first if the property is sold.
Second charge loans are riskier for the lender, so they can be harder to obtain and may come with higher rates.
Which charge applies depends on whether the property you are securing the loan against has a mortgage on it or not.
How long does a buy to sell mortgage last?
A buy to sell mortgage is a short-term bridging loan. These can typically run from just one or two months to two years. Compared to a standard residential mortgage that can last for 25 years or more, they require much faster repayment and therefore present much more risk to both the lender and the borrower.
How much is the interest on a buy to sell mortgage?
Interest rates for buy to sell mortgages are typically higher than residential mortgages, as lenders calculate interest on a range of factors, including:
- How much you need to borrow vs the value of the property
- How much deposit you have
- Your credit score
- How stable your income is
- The kind of property you are buying
- Your DTI (Debt-to-Income) ratio
Unlike residential mortgages, which quote interest annually, buy to sell rates are typically quoted monthly. In 2026, these have been around 0.5%-1.5% per month, however, rates will vary by lender and your circumstances. Rates are generally higher than on a residential mortgage product, reflecting the shorter term and the higher risk, but because they run for months and not years, the total amount paid can be less than it would on a long-term residential mortgage.
How much deposit do I need for a buy to sell mortgage?
A deposit for a buy to sell mortgage is normally higher than a standard residential mortgage. Lenders may ask for at least 20%. This is because such short-term lending is seen as much riskier than a loan spread over 25 years or more. Furthermore, if your exit plan doesn’t work, the lender could be left with a property that they struggle to sell.
In some cases, rather than cash, security on another property is used instead.
How much will a buy to sell mortgage cost?
A buy to sell mortgage is generally more expensive than a residential mortgage. Beyond interest, there are several other fees to factor in, such as arrangement fees, valuation and legal costs and charges for extending the term or repaying the loan early.
You should also factor in a contingency fund, especially if renovating the property with the aim of selling it. Renovations and repairs always cost more than planned, so having cash reserves to cover extra expenses should also be considered.
- Buy to sell mortgage arrangement fees: 1% to 2% of the total loan amount
- Valuation fees: Can be as low as £100 but could exceed £1,500
- Exit fees: 1%-2% of the loan amount may be applied when you pay it off. This does not always apply, so check in advance
- Broker fees: Fees vary per broker and may be determined by the complexity of the transaction
- Legal fees: Could range from a few hundred pounds to several thousand.
- Early repayment charges: Vary depending on how early you repay the loan but can be substantial
What are the advantages of a buy to sell mortgage?
A buy to sell mortgage can provide a property investor or homeowner with several advantages.
- Funds can be easier to obtain with decisions often made in days, not weeks.
- There is great profit potential, especially if the purchase price is significantly lower than the resale value.
- Buy to sell lenders are less concerned about the condition of the property as they understand it is likely to be renovated and therefore are happier to lend where other lenders wouldn’t.
- The mortgage is normally repaid once the property is sold or by transferring it to a residential or buy to let mortgage.
What are the disadvantages of a buy to sell mortgage?
There are disadvantages of a buy to sell mortgage that those considering one should be aware of:
- You will need a deposit of at least 20%.
- The interest rates can be high.
- Fees for late repayments or early exits can be high.
- The number of lenders offering these products is quite small.
- Because the property usually isn't lived in by the borrower, a buy to sell mortgage is normally unregulated, offering far less protection than a regulated residential mortgage.
Buy to sell mortgages can be a worthwhile option for those needing short-term finance, but they can be expensive and come with an element of risk. Those considering such finance should speak to a mortgage advisor before committing to any financial commitment. If you own buy to let properties and are now deciding it’s time to sell up, speak to Bettermove. We are on hand to ensure the quick sale of your properties, enabling you to sell your property portfolio fast, without spending a penny. We assist with selling tenanted properties too, and offer a range of options that can see a property sold in as little as seven days. Contact us today to find out more.
