Financing an auction property

[Notwavingbutsignalling]

Hello,

Does anyone know much about financing an auction property?

I always thought it was a bit of a dodgy area but I have been reading up on bridging loans, etc and there seems to be quite a bit of transparency there.

So, you could, in theory, get an aip from your bank and then get a bridging loan to cover you from the period between when you buy at auction and when your bank’s valuation approves the full mortgage. Could be 2 - 4 months?

obviously you’d get a valuation before bidding and do your homework on the property but the bridging loan rates seem manageable ( for a short period).

The only problem I can foresee is if the bank won’t give the mortgage (if they discover something) until work is completed so you would need to factor in if you had to pay for something.

I would appreciate any thoughts and ideas as I am doing this alone and trying to thing if all options. Thanks

Should be possible. To get a mortgage the property needs a kitchen and a bathroom. In reality that means a kitchen sink and microwave and a toilet. Other than that the house can be in a pretty awful state, black mould, leaky roof, no central heating, wallpaper coming off,and you will still get a mortgage, the house valuation will just reflect the state of the house.

DS2 bought his house at auction. He had the deposit saved, ready to pay on the day and he had an aip. He was a first time buyer so I don’t know if it made it easier to do. He got the keys a month after the auction date.

I’ve just bought a house in auction, it was through a modern day auction method where you have 56 days to complete. I had to put down a holding deposit and then have paid to have a survey done, if there is stuff which shows up on survey and it can’t go ahead then I get deposit back but there are a lot of clauses, you have to have searches done in a certain time and survey done in a certain time if I pull out I don’t get deposit back Also The conveyancing is different for auction properties, I couldn’t find one that offered no complete no fee for auctions

The property I’ve bought is only 20 years old so I only needed a level 2 rics, but then you are waiting for searches to be done and worried Incase Things show up on that

im a cash buyer so it sure about bridging loans, just trying to highlight a few areas to watch out for!

Thank you everyone- really appreciate it.

I think if you get an Aip then a bridging loan to cover you in case the mortgage doesn’t come through in 28 days and have done the sums it is possible.

the big issue is the valuation and any surprises but I think you can get valuations on auction properties before you go to auction.

@TheFairyCaravan

so he didn’t need a bridging loan! His mortgage came through within 28 days?

No, he had no bridging loan, just a mortgage.