There can be a few hurdles to jump when buying property at auction. It is therefore important to make sure your finances are in place before making a bid. Our team of specialist mortgage advisers can walk you through this process to ensure your auction purchase completes successfully and on time.
How is buying at auction different from purchasing a property on the open market?
Securing a mortgage for an auction property is different from securing a normal mortgage. If you are bidding on property in an ‘unconditional’ auction, this means you will only have 28 days to pay the full amount once your bid is successful; 10% should be paid upfront as a deposit and the remaining 90% must be paid within the 28-day window. If you miss this window, you may lose the bid and your deposit.
Buying via ‘conditional’ auction offers longer exchange and completion dates which will give you flexibility to consider applying for a mortgage, if you need to do so. In these cases, it is important to arrange for an independent survey to be carried out to ensure the Bank/Building Society will lend against the property. We can help you arrange this.
Find out more about buying and selling property at auction.
What type of finance do I need in place to bid at auction?
Unless you are a cash buyer, you will need a mortgage to finance your property bid. It is really important to speak to a mortgage broker in advance, because your finance will need to be pre-approved before you can bid at an auction. We can help you obtain a mortgage in principle which will give you an overview of how much you can borrow and acts as proof of affordability when you bid on a property.
If you haven’t been able to secure a mortgage in principle before the auction, a bridging loan may be a viable short-term finance solution. This is quicker to obtain and will enable you to buy your property while you secure a long-term source of funding. Bridging loans are often associated with higher interest rates, so speak to us to determine if this is the right option for you.
Are there restrictions on the type of properties I can buy at auction?
Generally, mortgage lenders will only provide finance if the property is in an immediately habitable condition. This means the property needs to have a functioning bathroom, kitchen, plumbing and heating systems, for example. It may be harder to secure finance on properties that require major refurbishment.
Why should I speak to a mortgage adviser?
Securing finance at auctions can be a complex feat. A mortgage adviser, like Knight Frank Finance, has a specialist knowledge of the auction process and can offer advice according to your situation. We have close relationships with all the major lenders and can help you secure the right type of finance before your next auction.