can you get a mortgage on an auction property?

January 22, 2024

266
Yes, you can get a mortgage on an auction property, but it requires careful planning and preparation due to the tight timelines and unique conditions associated with auction sales. You’ll need to arrange your mortgage in principle before bidding, ensure the property meets lender criteria, and be ready to complete the purchase within the auction’s specified timeframe, typically 28 days after the auction date.

Preparation

Before attending an auction, it’s crucial to have your mortgage pre-approval in place. This will give you a clear understanding of your budget and help you act quickly if you find a property you want.

Research

Research the auction property thoroughly. You should have a good understanding of its condition and potential issues. Some lenders might be hesitant if the property is in poor condition.

Auction Day

If you win the bid, you’ll typically be required to pay a deposit (usually around 10% of the purchase price) on the day of the auction. The remaining balance must be paid within 28 days.

Mortgage Application

After winning the auction, you have a limited time to secure a mortgage. Contact your lender immediately and provide them with all the necessary details about the property.

Valuation

The lender will conduct a valuation of the property to ensure it meets their criteria. If the valuation comes in lower than the purchase price, you may need to cover the difference.

Legal Process

You’ll need a conveyancing solicitor to handle the legal aspects of the purchase. This includes searches and title checks.

Completion

Once everything is in order, and your mortgage is approved, you can complete the purchase and take ownership of the property. It’s essential to work with a mortgage broker experienced in auction property purchases, as the process can be complex and time-sensitive. Additionally, lenders may have specific requirements for auction properties, so it’s vital to choose the right one for your needs.

Answered by:

Alison Gibson

Mortgage and Protection Adviser

Last Updated:

18.06.2024

Answered by:

Alison Gibson

Mortgage and Protection Adviser

Last Updated:

18.06.2024

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