Advice on getting a mortgage for auction property with land

Penri1980

Can anyone recommend any useful online resources or specific mortgage advisors who could help me investigate whether I could get a mortgage for an auction property with 15 acres of land? It needs some work but looks structurally sound and is habitable with a working kitchen and bathroom. The guide price is quite a bit lower than the AIP that I recently received, so I’m starting to dream, but don’t know if it’s realistic.

The mortgage advisor I originally talked to said that they didn’t advise on mortgages for auction properties and that more than 4 acres causes complications when trying to get a mortgage with most lenders.

Any help would be appreciated, the auction is in about 6 weeks. Thanks in advance.

user1977

You'd probably be better asking on the Mortgages board than here. In general, auctions aren't really set up for purchases which require mortgages because of the typically short time between the auction and completion. Or do you have alternative means of funding the initial purchase?

As you've already found out, too much land puts you out of scope of most normal residential mortgage products.

And generally with auctions, bear in mind that the bidding can go way higher than the guide price.

eddddy

Is this a 'traditional' unconditional auction? 

If so, you should really have 100% definite finance in place before you bid. e.g.  Not just an mortgage AIP, but a definite mortgage offer for the property you'll be bidding on,  or a  definite offer of auction finance (which can be very expensive), or cash in the bank.

It's also worth bearing in mind that many properties sold through unconditional auctions aren't mortgageable. If they were mortgageable, they'd probably be sold using a standard estate agent.


If it's a conditional auction (often called the modern method of auction), there might be more scope to arrange a mortgage - but there's also scope to lose a very big 'reservation fee'.

youth_leader

I sold at auction.  My auction buyer did have a L3 survey and his mortgage in place - but he did ask for eight weeks to completion.

Dustyevsky

A house might be structurally sound and still have some sort of Sword of Damocles hanging over it. Our neighbours bought a property which was proving hard to shift, despite having a good plot and appearing sound. They found out why it was cheap when they experienced their first really intense and prolonged period of rainfall here!

Some excellent properties with land and no particular problems do go to auction, but it's usual in those cases for the guide prices to be well-exceeded. Land is a pretty safe investment too, so at volatile times like these, expect to see landed property do better than usual.