Buying at auction instead of through estate agents

molit

Hi

I'm currently thinking about buying a place at auction with one of the following options, and wanted other peoples opinions based on my circumstances:

I currently have a deposit built up for about £15-6k, and own my flat with a mortgage (worth 130k is, outstanding mortgage 64k, give or take). I was planning to do the usual thing, of selling my flat, and buying something bigger, and freehold, rather than leasehold later on this year (looking to spend 170kish. I am wondering whether either of the following is a better idea:

Buy a place at auction with the 15k, do it up, and hopefully sell it at about a 5-10k profit, and use that profit to fund a bigger house move/reduce mortgage on new place. - advantage, could make money in the short term, if cant sell can always rent out the place, disadvanatage, might cost more to update than anticipated, might not be able to sell on.

Buy a place at auction, sell my place, and cover all but about 20k of the mortgage, and then use that as my home for a few years, then move up the ladder? Advantage, save a fortune on mortgage payments, still hopefully get a cheap house - disadvanatage, smaller place than I want (but dont need anything too big),

Thoughts appreciated - should I risk it while I have no dependents?

Doozergirl

If you want to move up the ladder, the best thing to do is sell your house first. I'd avoid auctions unless you're prepared to sell, rent for a little while and become a true cash buyer. Buying a property at auction is no sure fire way of getting a bargain. The reason behind selling these properties at auction in the first place should always be forefront in your mind; there's virtually always a problem of some kind.

Buying a house at auction for £15,000 gives you absolutely no room for any mistakes in terms of budget, and I doubt you'd see a £5-10k return after any work. Renting the house out because you can't sell it is no reason to become a landlord - that house will be sold sometime and will have to be empty. It's a liability either way.

It is possible to get a good house at auction, but it's equally possible to buy a house through an Estate Agent that needs work and that fits your criteria for the next step up the ladder. It would certainly be easier buying and selling in the normal manner as you have no worries about paying two mortgages, not being able to sell or having to move into rented. The fact that you haven't done anything like this before means that you should be looking to take as little risk as possible.

HTH