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How to buy at a property auction with a mortgage

To speak to our mortgage team about how you can get mortgage finance in place for an auction property complete the enquiry form below or call us on 0117 403 4474.

If you like the appeal of a property auction or have seen a house that you really want to bid for you may be wondering how you go about securing the money to be able to do so. Unlike the normal process for buying a house it can be trickier when buying at auction.

Firstly there is the issue of the lender not knowing the property they are lending against and the value of that property. You can get an agreement in principle for a certain amount but the pitfalls of buying at auction are much more than through the traditional channels.

Get a good mortgage advisor

Sit down with a mortgage advisor and discuss your requirements. Show them the type of property you are interested in and work out what you can afford to borrow. They will have much more experience in dealing with this type of mortgage and will know which lenders are more likely to lend to you. They will also be able to advise on the lenders that will be able to work to your time frame.

Once you have an agreement in principle, and have placed a successful bid on the property, you only have 28 days in which to complete on the property and produce the funds. Once the best lender and product has been selected for you your advisor will be able to do everything needed to get you a mortgage certificate. Proof of the mortgage agreement in principle has to be produced at auction upon your bid being successful.

How does the process work?

There is a lot of preparation to be done when buying property at auction -

  • Consult with your mortgage advisor and discuss which loan is best for you

  • Raise a 10% cash deposit to produce at auction

  • Do your research

There will be brochures of auction lots released in advance of the auction. It is worth looking into the values of these properties by talking to local agents and looking at other selling prices in the area.

If you do your research you are less likely to falter at auction and bid too much for something putting your deposit at risk. If the lender only values a property at £150k and you have bid £180k then you are going to be in a tricky situation.

Once you have placed a winning bid on the property that you wish to purchase you will need to put down a 10% cash deposit and produce a mortgage certificate for the remainder. You then have 28 days in which to complete.

What could go wrong?

You have to go into this realising that it is riskier than buying a house through an estate agent. Once you have successfully bid on a property a binding legal agreement is formed in which the house becomes yours. It is therefore your responsibility to ensure that you insure the property, buildings and contents, and that you complete the mortgage application with funds ready in 28 days.

Should the lender undervalued the property and you do not have the cash to make up the difference you will lose the property and your 10% deposit. That’s why we strongly urge you to speak to a professional mortgage advisor that can get you the best deal from the right lender and do your research first. 

Our Mortgage Service For Buying Property At Auction

Special features of what we offer include:

  • Fast service if you are looking to raise finance for a property auction

  • Get the best flexible mortgage deals in the UK

  • Whole of market service - we work with most UK lenders

  • Access to leading market mortgage rates

  • Access to exclusive loan deals not available on high street

  • Looking to raise additional finance on top of your existing mortgage or buy to let mortgage? - we have access to a range of finance solutions

To investigate your flexible mortgage options call our mortgage team on 0117 403 4474 or fill in our call back form.

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