Buying a property at auction: does it worth risking deposit in my circumstances?

QQQ

Hello,
I am going to try to buy a property at auction, since it might be cheaper. But I have to leave 10% deposit at the auction day. As far as I am aware the agreement in principle does not guarantee that I will get mortgage. The main problem is that I am a migrant with 3 year Tier1 visa and a short credit history (but no arrears and good income). I have a cash for 15% to 20% morgage deposit.
And if a lender will keep thinking more than a month, than my auction deposit will be gone. Is it 'mission impossible' sort of thing or it is actually feasible?

Does it really worth risking the deposit that way?

happybroker

You can get to the point of formal mortgage offer before the auction if you want. You would need to pay for a valuation of the property.

your resident status is not impossible but you would be well advised to get some decent formal advice before jumping in with this kind of scenario.

sounds exciting though, good luck

herbiesjp

You would have to have the mortgage ready to be offered by the time the auction happens ideally.

That way the lender will have done all the necesssary checks, and the offer will be subject to a good survey.

You could even have the survey done.

Then figures would be amended on the offer if need be, but by having the survey done beforehand you will know what the property is actually worth, and what bids you can actually put in based on your circumstances.

You really will need professional help with this, and therefore you will be better off speaking to a whole of market mortgage adviser.

QQQ

herbiesjp wrote: »

You could even have the survey done.

Unfortunately it is costly, and I will have to do several surveys until I win the auction. At the end of the day, I will spend thousands on survey.

herbiesjp

Why several suverys?

You only need one

I cant see you spending thousands on suverys - maybe £500 (depending on type and property value)

QQQ

herbiesjp wrote: »

Why several suverys?

Because it will take ten to twenty attempts to win a property at auction at a reasonable price.

herbiesjp

I think you need professional help

Look at this way

You place the winning bid and put down 10%

You then appply for the mortgage

You then have problems getting the mortgage agreed

You then have problems with the survey

The surveyor says the property is worth less than you are paying for it

This causes delays

You go over the 28 days

You lose 10%

I'd rather lose £500 knowing the mortgage is offered, and only needs the legal work to be done in 28 days, rather than starting from scratch

The odds are stacked in your favour my way - your way, can leave you 10% out of pocket!

silvercar

So this is a random search for a property at auction, rather than having seen a particular property that you know is undervalued?

Many properties sell at market price at auction these days. I wouldn't autmatically assume that anything at auction is a bargain; or that anything not at auction is not a bargain.