Mortgage to buy at auction?

cdbe1

Hi, we wish to move house in the next 12 months and may buy our new home at auction. We have a house worth £250k (no mortgage) and £60k in cash. We would spend up to £160k on the new property so we are looking to have quick access to up to £100k by borrowing against our existing house. Within 6-12 months we would sell the current house and clear the mortgage. I am looking for a (cheap or free - in case we don't find anything at the auctions) way of arranging this borrowing/re-mortgage in principle which would allow us to possibly borrow up to £100K quickly to complete on an auction purchase. Obviously early redemption fees may be an issue when we sell unless we can transfer the mortgage to the new property for a few years - ultimately we would like an offset mortgage on the new property so we could have cheap and quick access to flexible borrowing for a future business venture.

Is any of this possible or is something like bridging finance an option? Or is there such a thing as a risk free mortgage package for buying at auctions? I am terrified that something would go wrong with solicitor/valuations etc and we would lose our deposit.

I know we could just sell the current house first and rent short term but good properties are few and far between at the auctions and we would hate to miss something that comes up in the next few months.

We have no credit/income issues etc.

Thanks.

handytips

Firstly whe you bid in an Auction there are many risks especially with a house. It is essential that you view the house before bidding on it, ask the agent if it is suitable for mortgage purposes, if they are wooly with the answer get a good broker involved and they will probably be able to guide you. Once the hammer goes down then you have to leave 10% deposit on the day, get an Agreement in principle before you go so atleast you know you can have the funds assuming the property is fit for mortgage purposes. if you have any doubts as to the construction of the property once again ask the agent. There are few lenders who will lend on unusual construction. Bridging is expensive and can be a disaster if you havent got an exit strategy. Seek out the services of a Broker and not a Bank

cdbe1

Thanks, I am aware of the risks of buying at auction, including those relating to many auction properties being un-mortgageable, and the requirement for 28 day completions, hence my desire (at least initially) to borrow against our own (mortgageable property). I want something flexible that will allow us to get the cash quickly if we need it but not cost an arm and a leg in fees if we don't. For example I used to have an open plan offset mortgage which I (unfortunately) paid off and closed down - I could have written a cheque for £100k (for whatever I wanted) against this tomorrow morning.

I think what I am looking for is a remortgage offer where the lender says: "We have done the valuation, checked your income etc and will lend you £XXX, give us a call when you want to proceed"

Caroline73_2

Could you remortgage your existing property and use the funds to purchase at auction?

This isn't advice, just something my laymans head wondered.

handytips

Yes you can do that

Thrugelmir

Sell up and rent. The cheapest and easiest way of achieving your goal.

cdbe1

I think you are probably right - I just wouldn't want to miss our "dream home", but then there is always another "dream home" out there. It's just difficult when we have made the decision to move and have already started looking in the new area that we will have to be patient and wait to sell our house first.

Leon_W

I think you sort of answered your own question really.

The cheapest option would be to remortgage your present property onto an offset mortgage. If you don't use the money then it's not going to cost you.

King_Of_Bling

Leon_W wrote: »

The cheapest option would be to remortgage your present property onto an offset mortgage. If you don't use the money then it's not going to cost you.

So, someone could apply and get an offset mortgage, for say £25K, and they wouldn't have to use it and all they'd have to do is pay the arrangement fees and no interest until they dipped into it?

Leon_W

In a worg King of Bling. Yes.