House flips are common in the UK.
It can be a great way of making a good profit within a year or two.
And for some people, it’s a full-time profession.
This blog explains how to finance a house flip in the UK.
What is a house flip?
A house flip is when someone buys a property to improve it and then sells it for a profit. It is common in the housing industry.
The timeframe for each flip varies, as does the type of ‘flipper’ involved.
Besides individuals, you’ll often see property investors and house-buying companies flipping properties.
They will often enter the market searching for these opportunities. The sales may be secured at an auction house.
How to finance a house flip UK
You need instant, large sums of money to finance a house flip. There are several ways to do this. The main examples are listed below.
Secured loan
This is a type of loan you get from a bank. It involves using another valuable asset you own as ‘collateral’.
So, if you fail to meet your repayments, they can take this other asset from you.
Unsecured loan
This is the opposite of a secured loan. It gives you access to money without using an asset to secure it.
This is thus seen as more risky by banks. You may only be lent smaller sums through this avenue.
When applying for this, they’ll want to know about your:
- Income
- Credit score
- Marital status.
And more.
It impacts the amount they’ll lend you.
Bridge loan
This is useful if you only need the loan for a short period. Perhaps you’re selling another house, but it hasn’t completed yet.
This bridging loan can ‘bridge the gap’. Just keep in mind it comes with high interest rates.
Retained profits
Lots of people that house flip do it as a full-time career move.
This could be as a full-time property investor. Or you might be a cash buying company.
Either way, success over many years can create a large pile of retained profits.
You can utilise this to buy a house without asking the bank for a loan.
