Can You Get a Mortgage for Auction Properties?

When considering purchasing a property at auction, one of the most common questions is: Can I get a mortgage for an auction property? The answer is yes, but it’s essential to understand the process and be prepared for the unique challenges associated with auction purchases. Here’s what you need to know.

Understanding Auction Timelines

Unlike traditional property purchases, buying at auction involves strict timelines. Once the hammer falls, you typically need to pay a 10% deposit immediately and settle the remaining balance within 30 working days. This short timeframe means you must have your finances in place before bidding.

Standard mortgage applications can take weeks to process, so it’s crucial to plan ahead. Many buyers opt for a pre-approved mortgage in principle, which demonstrates your borrowing capacity and speeds up the process after a successful bid.

The Importance of Property Surveys

Lenders want to ensure the property you’re buying is suitable for a mortgage. Auction properties may sometimes be in poor condition, making them less attractive to standard mortgage providers. To avoid surprises, commission a survey or review the legal pack provided by the auction house. This will help you identify any potential issues, such as structural problems or leasehold restrictions, which could impact your mortgage application.

If a property doesn’t meet the criteria for a standard mortgage, alternative options like bridging loans or refurbishment mortgages might be more appropriate.

Specialist Mortgage Providers

Not all mortgage providers are comfortable lending on auction properties, so it’s worth speaking with a broker who specialises in this area. They can help you navigate the options and find lenders who are familiar with the fast-paced nature of auctions.

Specialist lenders often consider properties that need renovation or have unique characteristics, but they may require a larger deposit or charge higher interest rates.

Tips for Securing a Mortgage

1. Get Pre-Approved
   Arrange a mortgage in principle before attending the auction. This ensures you know your budget and can act quickly if you win the bid.
2. Work with a Specialist Broker
   A broker with experience in auction purchases can connect you with lenders who understand the process and can work within tight deadlines.
3. Do Your Due Diligence
   Review the property’s legal pack thoroughly and, if possible, commission a survey before bidding. This helps you anticipate any issues that might delay financing.
4. Consider Alternative Financing
   If a mortgage isn’t feasible, bridging loans can provide a temporary solution, allowing you to complete the purchase while arranging long-term financing.

Final Thoughts

Securing a mortgage for an auction property is entirely possible, but preparation is key. By understanding the process, working with the right professionals, and ensuring your finances are in place, you can confidently approach an auction and take advantage of the opportunities it offers.

If you’re ready to explore the exciting world of property auctions, get in touch with First for Auctions. Our team can guide you through the process and help make your property journey a success.