Mortgages for Auction property

Crokeria

Hello. I already have a mortgage on my home but not much equity....but I want to buy a property at auction to do up and sell on....I need a mortgage for this...can anyone suggest a lender and will already having a mortgage be counted against me...I would put down a 10% deposit...do any lenders not like auction properties....many thanks

MortgageMamma

Hi there

are you aware of the full implication of buying a property at auction? you have to have alot of legal work, valuation and mortgage agreement in principle in place before you bid, and you have to give a 10% minimum non returnable deposit on the day to name but a few.

TangentMan

I don't know if there are any specialist products out there, since you might be in a catch 22 for a mortgage. A mortgage lender might give you an agreement in principle for an agreed amount, but they will want to survey any property before agreeing to lend you money secured on it. However you won't be able to purchase the property at auction without the funds.

Unless others have another suggestion and if you can't release equity from your property, perhaps your step onto developer ladder has to be to buy a property in the normal manner and build up cash to fund your own move into the auction room.

Your existing borrowing won't count against you, but it will be taken into consideration for underwriting purposes.

Crokeria

Thanks for you replies, they make it look so easy on the TV...I guess they are all cashbuyers...

maryjane01

Hi, I plan to bid on a property at auction tomorrow (to do up and live in, not sell on). As already said, you need a mortgage offer in principle going in, you pay a 10% deposit non refundable, then the mortgage is still subject to survey and if you don't have the balance to pay on completion date you lose your deposit. I guess you could do all the survey and before hand at your own expense and pay for the mortgage application and get it properly approved, not just in principle, but then you may not win at auction.

We are taking a big risk and we know it. I woudn't recommend it to anyone because of what you have to put on the line. I guess it depends how close to the edge you want to live, we are giving it a go because we think if we can pull it off (with a level head we obviously think that is more likely than unlikely) we think the benefit will be so great to us. High risk high return strategy and only each individual can make that decision for themself. We are young and if it fell through it would be a huge blow but I think we would recover, it might just delay us ownin our own home by 3 years!

vinno65

Hi All,
another option (maybe expensive) would be a bridging loan. Then when you have bought your property you can raise a mortgage on it. If you don't pay the loan off.
regards Vinno

Snippy30

maryjane01 wrote:

Hi, I plan to bid on a property at auction tomorrow (to do up and live in, not sell on). As already said, you need a mortgage offer in principle going in, you pay a 10% deposit non refundable, then the mortgage is still subject to survey and if you don't have the balance to pay on completion date you lose your deposit. I guess you could do all the survey and before hand at your own expense and pay for the mortgage application and get it properly approved, not just in principle, but then you may not win at auction.

We are taking a big risk and we know it. I woudn't recommend it to anyone because of what you have to put on the line. I guess it depends how close to the edge you want to live, we are giving it a go because we think if we can pull it off (with a level head we obviously think that is more likely than unlikely) we think the benefit will be so great to us. High risk high return strategy and only each individual can make that decision for themself. We are young and if it fell through it would be a huge blow but I think we would recover, it might just delay us ownin our own home by 3 years!

Hi Maryjane - how exciting - come back and let us know if you won, and how you found the auction experience. and GOOD LUCK! :eek: