Buying at auction

barroldo

I am a first time buyer and have been pre-approved for my mortgage by the bank.

I am looking at a house that is for sale via auction. I have a few queries that hopefully someone can clear up for me.

I know banks require a deposit before they release the funds of the mortgage. Is this the 10% deposit that I pay to the auctioneers upon winning the auction?

For talks sake, if the house is valued at £79000 and i get a mortgage of £50000, maybe a stupid question but does the £29000 difference count as a deposit?

Thanks in advance for your help

ACG

IT does count as deposit yes.

Im presuming your a FTBer?
Buying at auction probably isnt the way to go. You usually have to complete in 28 days or something. So you would need the mortgage all but in place before the mortgage even kicked off...which you would struggle to do not knowing the purchase price etc.

Buying at auction is more for people with the cash or able to remortgage their existing property.

barroldo

thanks ACG

I have a mortgage agreed in principle with and they have assured me it will be cleared within 28 days.

Another question I have is, does the money from the lender go straight to the seller? or does it come to me and then I send the money on to the seller?

ACG

It goes to the solicitor, solicitor sends to the seller.

They can assure you all they like, but its the solicitor that takes the longest usually.

In my opinion there is far too much that can go wrong, your heavily reliant on the lender, solicitor and surveyor - all it takes is the surveyor to not be happy or the lender to want some additional info and your going to be pulling your hair out.

The thing that usually takes the longest is the solicitor, although some lenders are taking a lifetime at the minute (nationwide being one at the forefront of my mind).

Dave_Ham

This is honestly a bad idea, auctions are for the professionals or the well informed.

Unfortunately this forum will give you an idea of the process, but I think you will be just as good burning your money.

Your funds and the bank funds go to your solicitor who undertakes the transaction. Obviously 10% usually is held by the auction house, but your solicitor should talk you through this part of the process.

Your risk starts now, if you are serious for a specific property you should really get your mortgage company to undertake the valuation now.

You will need to pay for this and to check it is suitable security for the bank. Many auction properties are not mortgageable in their current state - hence the cash buyers and investors typically buying.

With a valuation paid for, you have to be mega disciplined to then not pay over the odds for the property.

If you do not value in advance, you are unlikely to be able to complete in 28 days or worst you may not achieve finance and you have wasted circa 10%

I would urge you to reconsider this path

davemorton

Also, take no notice of the guide price, as they can quite often be artificially low to entice bidders.
Just to echo everyone else, you will be very hardpressed to get everything through in 28 days.

Trollfever

It is essential that you have on board an auction friendly mortgage lender, valuer and solicitor,