Property At Auction ? .......Best Morgages

Dave_Online

Can anyone tell me if there is ether a best practice plan for mortgaging a property you have bought at an auction or a particularly astute way of mortgaging for property buyers with this in mind?

To set out my stall “so to speak” I am looking to purchase quite a simple small property in a reasonable area with reasonable transport links and I am looking to buy it on my own.

I have set aside a modest about of savings to help me and im hoping to divide this into 3 parts (continued savings)(money to renovate the property) (a deposit) but to keep the monthly payments down I think that to buy at auction might be a good route for me as im not afraid to get my hands dirty.

Richard_Webster

You need a firm and formal mortgage offer from your lender before you bid at auction otherwise there is always a chance, if you are successful at the auction, that the lender won't lend (or won't lend enough) on the property for one reason or the other!

As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients.

hollyblue

Dave

My understanding is that although it is not essential to have a mortgage offer in place before purchasing at auction, completion must take place within 28 days of you winning the property at auction. 28 days is not a long time especially if, as Richard says, you have difficulties in getting the right mortgage. You can get a mortgage offer 'in principle', however again, this is not a definite offer and it can be revoked.

If you do not complete within 28 days you will be charged penalties.

Richard_Webster

Just to add to what I said previously - it isn't just your status from a lending point of view that could be an issue. You can probably make sure that is OK before you go to the auction.

There could be a problem with condition or type of construction that causes the lender not to lend.

The lender might even issue an offer. Offers are always conditional on the solicitor being satisfied that the legal points are OK for the lender. There could be something like an occupancy condition - only for people who have lived in the area for 3 years - or maintenance obligations in a lease which are supposed to be carried out by a company that no longer exists.

You need to get a solicitor to look at the legal pack as long before the auction as possible so he can warn you about any legal issues that emerge from the paperwork and give him to time to ask about anything that could be a problem. Even then it is not always possible to find out everything, but at least you can reduce the risks.

As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients.

silvercar

hollyblue wrote: »

Dave

My understanding is that although it is not essential to have a mortgage offer in place before purchasing at auction, completion must take place within 28 days of you winning the property at auction. 28 days is not a long time especially if, as Richard says, you have difficulties in getting the right mortgage. You can get a mortgage offer 'in principle', however again, this is not a definite offer and it can be revoked.

If you do not complete within 28 days you will be charged penalties.

Best to have a bridging loan or some othe temporary finanace in place in case your mortgage offer doesn't come through in time.

pricedout_1

From what I know the main thing to do is to get the legal pack checked out as Richard says. This gives you the go-ahead to bid.

The other thing you could do is to take a builder with you when you view before the auction and get him to check the place over and give you a quote at the same time.

If you do the above then it should reduce the risk. It seems the main risk after this point is that the lender could value under what you need. Maybe talk to a few lenders about this and see what they say? Ideally you could arrange for the lenders valuer to value at the same time as you view the property with your builder you could then get the mortgage valuation and builders quote at the same time?