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Mortgages For Auction - Why You May Need One

Apr 29, 2008
What are mortgages for auction? Buying a house is becoming increasingly more difficult for many people these days, especially those wishing to get on the property ladder for the first time. For this reason some people consider buying a house at auction, as they may be able to find something that needs some work and therefore may be a little cheaper.

One of the main attractions of buying at auction for many is that the house buying process can be considerably shorter then the standard way, which can drag on for many months, and you do not have the worry that you will suddenly lose the property half way through the process. The only drawback is that once the hammer has gone down you are in a legally binding contract. Therefore it is imperative that you have sorted your finances out prior to attending the auction as that may be problematic getting a traditional mortgage if you need to borrow a high percentage of the price and the property is in need of care and attention. As the successful bidder you will find that you have around 28 days to fully complete the purchase, otherwise you will lose your deposit and the property as well. Finally you need an offer of mortgage for auction from the Lender in place before the auction.

The building societies, banks or broker that you approach will let you know the amount that they will be willing to offer you for a mortgage for auction once you have begun looking for a property. The exact mortgage offer will then be finalised once you have decided which house you want to buy. The amount you can borrow will be based on many factors such as your income and that of any other person that will be owning the mortgage with you; your status; the valuation of the property etc. It is important to make sure that you will be able to meet the mortgage repayments in both the short and long term.

There are a number of ways in which you can find a mortgage for auction to put you in the best stead when buying this way. One way you can do this easily is by going through an online broker who can search a large database of lenders to find you a suitable deal. You could also approach the mortgage lenders directly to compare what they have to offer. However, going through a broker ensures you get the best possible choice of mortgage products. You should try to sort out a mortgage quite early on in the process of buying at auction. This is because it can take a few weeks to process. There are a number of mortgages available to you and the type you opt for will depend on your circumstances. Your lender or mortgage adviser will be able to go through the options that suit you best and help you to find a suitable mortgage that you will realistically be able to meet the agreed repayments on.
About the Author
Sean Horton is a Director of Enhanced Wealth, a whole of market mortgage broker and IFA specialising in mortgage advice and the associated areas of income protection, mortgage protection, and mortgages for auction.
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