Best type of loan to use as deposit at property auction

cheryl1_2

I'm thinking about buying a property at auction but dont have the 10% needed to put as a deposit on a house, as all my money is tied up until i sell my house.Please could anyone give me advice on what type of loan to take out.

Thanks

Cheryl1 (new to the forum);)

Doozergirl

Welcome cheryl1! I think we need a bit more information.

If you just need the 10%, how are you going to fund the other 90% within the 28 day period? If you need a mortgage you really need to have a survey carried out beforehand to ensure that there is nothing wrong that will prevent you from getting the mortgage for the full amount you need.

Have you had an offer yet on your house? If not, do you have enough equity in it to release the funds?

peterg1965

I would say you need cash for the deposit and be ready to take out a mortgage within a month or so of buying at auction. As the previous post says you should already have completed a survey before the auction and have agreed a mortgage in principle with your lender. If you need to sell your current house first, you may have to consider moving into rented accommodation to be in a position to move quickly.

Richard_Webster

Why is it being sold at auction?

Don't touch a flat unless you really know what you are doing because there could be all kinds of traps waiting to catch you! Unmortgageable flats are often put in auctions in the hope that a mug will pay over the odds!

Even houses can have a problem such as subsidence, or if in a country area there could be an agricultural occupancy condition on the planning permission.

Whatever it is you need to do your homework.

If you need a loan for the deposit then you would need to make sure that you have actually exchanged contracts on your sale (with the possibility of being left homeless) when you go to the auction, otherwise how will you afford it?

As a solicitor I believe what I have said is useful but I can have no liability to anyone who is not my paying client.

BobProperty

Richard_Webster wrote:

Why is it being sold at auction?

Don't touch a flat unless you really know what you are doing because there could be all kinds of traps waiting to catch you! Unmortgageable flats are often put in auctions in the hope that a mug will pay over the odds!......

Completely agree with the above. Don't forget the guy in the Property Ladder series who bought a "bargain" flat (in Brighton?) only to find out he'd not read the legal details and the place was sold subject to a £75,000 bill coming along in a month or two for improvements to the whole block.
edited to add link
http://www.channel4.com/4homes/ontv/property-ladder/pl_notts.html

cheryl1_2

Doozergirl wrote:

Welcome cheryl1! I think we need a bit more information.

If you just need the 10%, how are you going to fund the other 90% within the 28 day period? If you need a mortgage you really need to have a survey carried out beforehand to ensure that there is nothing wrong that will prevent you from getting the mortgage for the full amount you need.

Have you had an offer yet on your house? If not, do you have enough equity in it to release the funds?

Yes i have had an offer on my house and would be able to put down a good amount but still need morgage for the rest:rolleyes:

cheryl1_2

Richard_Webster wrote:

Why is it being sold at auction?

Don't touch a flat unless you really know what you are doing because there could be all kinds of traps waiting to catch you! Unmortgageable flats are often put in auctions in the hope that a mug will pay over the odds!

Even houses can have a problem such as subsidence, or if in a country area there could be an agricultural occupancy condition on the planning permission.

Whatever it is you need to do your homework.

If you need a loan for the deposit then you would need to make sure that you have actually exchanged contracts on your sale (with the possibility of being left homeless) when you go to the auction, otherwise how will you afford it?

As a solicitor I believe what I have said is useful but I can have no liability to anyone who is not my paying client.

Thanks for the help.I would be looking to buy a house at auction.