How can I get a mortgage on a property bought at auction?

panos100m

I would like to look into buying a property at auction as I am a first time buyer, unable to get a foot on the housing ladder. After looking into various Goverment schemes, my only other option is shared ownership.

I would like to know the process of raising a mortgage for a property bought at auction.
I know that a 10% deposit is required on the day of the auction.
Is it a case of obtaining a mortgage in principle, purchasing the property and then applying for the mortgage after the sale?

I am assuming that no mortgage lender will lend money without there being a property in place to secure the loan on.

Any information on this would be appreciated

Many thanks

rjm2k1

I think people who need finance generally use something other than a mortgage (eg cash, bridging loan) to purchase and then re-mortgage once it's theirs. You have to complete pretty quickly once you win so a mortgage can take too long due to all the searches etc.

herbiesjp

In reality you would need have the mortgage offer in place, by the date of the auction. SO you will need to have had the survey carried out and submitted the full application.

This will take the pressure and stress out of the mortgage side of things.

Then it will be down to the solicitors to make sure that you complete within the timescales set out at the auction - and yes you will need the deposit on the day of auction

If you wait until after the auction to submit the mortgage application, I believe you will probably get very pressured and stressed making sure it is all sorted, which as a FTB you can well do without.

toonfish

we have used lenders offering free valuations to get an offer in place eg Coventry. That way if you don#t get the house there's no outlay. If you get a product with no penalties as well you can soon remortgage it.

Conrad

The trouble is your Solicitor also acts to take care of the lenders interests, this is where the big delays can come. Delays ensue with ordinary sales let alone auctions where often paper work is not available - one reason auction properties are cheaper.

The lenders asset must be adequate and saleable should you default on the mortgage, hence why all the i's must be dotted.

It can be done but it's a big risk as you lose the 10% if the deal is'nt done within 20 working days.