How to get a mortgage for auction property?

stphnstevey

I know this is not the normal way and you normally would need to be a cash buyer, but a couple of members have mentioned you could set up some sort of mortgage prior to going to the auction rooms - please can someone explain how this could be done?

david29dpo

i am doing this at the moment. apply as normal in ample time to get an offer before the auction BUT tell the lender not to send in the valuer until you say so, i.e. after the hammer has dropped in you favor, this will save you the valuation fee ( in my case ) my lender will give me an offer before a valuation is this case because the flat is only 2 years and i have 50% deposit, also on first name terms with them!

MickKnipfler

Couldn't you come unstuck then if the valuer says that the property isn't mortgageable?

Ems*Honie

I thought you could only obtain an offer after the lender has surveyed the property?

david29dpo

the flat is mortgage-able, its a repro, it is possible to get an offer without a survey in this case.

MickKnipfler

but, wouldn't any offer be "subject to valuation"?

david29dpo

yes it would, sorry to mention, putting down 50%.

AndrewSmith

Having dealt in the past with auction properties, and actually bid by proxy for clients at auctions it is my experience that you need to be 150% sure of the property and a few other issues before entering the auction room.

Know your top budget. This is what you should base the mortgage on. There are some lenders that will offer an open agreement to lend up to 'x' amount for such cases dependant upon your deposit.

Have the survey carried out long before entering the auction. This is vital as there may be hidden problems with the property that may be costly to put right, and that could stop the lender actually lending on it. It also allows youto obtain quotes for any work that is needed, to help you ascertain your top level budget.

Ensure you have your deposit available, 10% min in liquid funds as you will be expected to pay this on the day of the auction,and usually complete within 28days hence. I have even known some auctions stipulate that you exchange contracts on the day.

Make sure that your solicitor has all the legal paperwork ready prior to the auction.


Amongst other, I have found that the Halifax in the past have been very good with such mortgages, and have been prepared to literally sit at the end of the phone waiting to hear what price the property has been bought for. They have then, as long as everything else is ready, been able to issue the mortgage offer pretty much straight away.

My advice is make sure you fully understand the T&C of the auction, and have surveys, quotes, legal work etc all in place before you even begin to bid. Last thing you want is to come up against problems obtaining the money or finding costly repairs after you have agreed to purhase.