Anyone used auctions + short term finance for purchase?

[LondonRat]

Hello, long time lurker here. Have found our dream house but it’s a do upper going up for auction. Worst house on the best street. Thought it was completely not an option as we will need a mortgage and we haven’t sold our own house yet either.

BUT.. looking through the auction site they mention a partnership with a short term financing company to provide essentially bridging loans so that completion can happen in the 28days post auction sale. then this bridging loan gets paid off once your standard mortgage is approved.

I’m tempted to call the company and see if it’s an option. We have enough cash for the deposit, auctioneers fees, stamp duty etc, plus some reserves to do some immediate repairs… but obviously not proceedable since our current house isn’t sold. The house up for auction is technically habitable so getting a mortgage feels not impossible (structurally ok, has kitchen, bathroom) it’s just been used as a HMO so needs a full gut and decorative reno.

So my question is, has anyone used these type of bridging finance loans to purchase auction property? Is it really stupid to be even considering this??

This sounds a seriously bad idea considering you haven't sold your own house yet. I think you're being too rash.

If you want to move, the first step is to get your own house on the market and ideally get an offer before you even start seriously looking at properties for sale.

This woman took out a bridging loan and it turned into a nightmare https://inews.co.uk/inews-lifestyle/money/taking-out-75k-loan-cost-me-house-2578035

But then againhttps://propertyhub.net/podcast/dont_be_afraid_of_bridging_finance/

A friend of mine did this however the sale of their property took longer than expected and they found the bridging loan extremely expensive.

I would run a million miles from this idea, and then, to misquote the Proclaimers, run a million more. Bridging loans are very high risk and the property market at the minute is awful. Sorry OP

Oof thanks everyone, lots to think about, will have a good look at the links. Yes I do think it’s a bit of an insane idea so it’s good to get other’s opinions!

I did enquire about a bridging loan and the quote was extortionate- it would have added tens of thousands to the overall moving bill!

If you sell your place to a no chain or very short chain buyer it's possible to complete within 8-12 weeks. We used to send group emails to the solicitors and estate agents to push them along and confirm status.

Agree with everyone that bridging loan is a bad idea because you have no control over the mortgage application and have no certainty on how much you need to set aside for that interest.

I bought my house in an auction. Just a few weeks ago actually. Called up a couple of mortgage advisors and the perception was lenders may not be able to work with auction timeline. I paid cash at the end.

But i would not discount a property just becuase its sold in auction. I had quite a positive experience about the process. Everything is negotiable for one. The floor price is not the floor. I paid less than the open bid. If you are the only interested party, can also negotiate the contract exchange date. i.e. you dont have to commit to "bidding" at the set date. You can get your mortgage first then bid. The property will just be moved to the next auction if it doesnt get sold. Since so much work is required, it might not shift soon. And you can conduct survey before bidding.

The 28 days is only between bidding and sale completion. You can take as long as you want before bidding for survey, mortgage, conveyancing. Just like any normal property sale. If you are the only interested party.

No harm giving them a ring!