Does anyone know of a mortgage which can be paid back entirely after a term of say 12 months?

[jampot]

Basically I want to borrow some money for a couple of properties but with a view to developing them and selling them on. I would anticipate being able to repay the mortgage entirely within 12 months. Does such a thing exist?

We have just taken out a tracker mortgage with Abbey National - there is no penalty for early repayment in full, but the arrangement fee was £699 which was pretty steep I thought.

Most flexible mortgages will allow you to pay off in full without penalty- although you do have to pay some kind of exit fee of a few £100s I think.

this would be more for development than residential though and based on our end figure not our income now if that makes sense.

Say I want to borrow 300k to buy a couple of houses and do them up with a view to selling for 400k I would want to pay the 300 plus interest at the sale of the properties for example

I think you would still have to pay the interest repayments during that year though. You 'might' be able to get hugely disocunted for one year loans. Thinking of that property ladder programme thye always had tp make the interest payements

You can get a mortgage specifically for property development where you only pay interest and repay the capital out of the proceeds of the sale. Interest still accrues month to month, but you never actually have to part with cash until you sell on. My brother does this and usual terms are 6-8months. Makes for a speedy property turnaround. I think he arranged it throught he bank and was a commercial mortgage through his company...

Don't know if this helps??

sorry - that should read interest & capital out of the sale proceeds. He dosn't pay a penny until he sells

hmmm, then I don't know, sorry. But I think crunchie is probably right that you would have to pay the interest monthly rather than when you sell. I haven't a clue how property developers do it I have to say..

oh well I am wrong then bootmonkey. You learn something new every day...

We have just switched our mortgage to ING Direct as they have no early repayment fees at all and a low rate at the moment. We also have paid no fees to move the mortgage (legal & valuation free) and I found the on-line application and subsequent paperwork really easy to deal with. Highly recommended - and I am v picky about this kind of stuff!

bootmonkey - could you contact me on [email protected]

you need a closed bridging loan

the Abbey has a flexible mortgage - might be worth looking into - you can draw down money at whatever amount you want up to a certain limit, and pay money back in whenever you want.

OK - I have more info from my brother. It is not a mortgage, but business finance with the loan secured on the property. Most banks do it. Expect to pay approx. 2% interest above base rate with a 1.5% set up fee. Fees are paid up front, interest when the property is sold. Each loan is for a
nominal 6 months with a rolling period after that, which as long as the bank is happy with the way the project is going, is not a problem to extend, after all, they make more money then longer you have the loan. Expect to have to provide a 30% deposit...

Hope this helps & good luck!

Thinking on, you will probably need to run your property development as a company to qualify for this and you will then be liable for taxes accordingly....??

whatever way you do it you will have to pay tax on the gain, interest on the loan, insurance on the property will be different as it will be empty and not your main residence ditto a mortgage not on tour main residnece is always more expensive rate above base

alternative is to raise the mortgage on your main residence to purchase the other properties I think this is common on those tv progs

lots of hidden costs in buying and selling properties for gain

You can pay off a mortgage at any time(legally speaking). You'd need to negotiate your special terms with a lender as obviously they're not going to make much money out of you in such a short space of time unless you took out a further mortgage to finance more purchases.