Can You Buy a House at Auction with a Mortgage? Here’s What You Need to Know

At Hammered, we pride ourselves on being a trusted resource for anyone looking to buy or sell at auction. Among our buyer community, the most frequently asked question we get is, “Can you buy a house at auction with a mortgage?” With that in mind, we’ve decided to address this vital topic head on, with this comprehensive guide for all aspiring property buyers.

 
Can You Buy a House at Auction with a Mortgage?

The short answer is yes, you can! However, getting a mortgage for auction property is not always straightforward and carries its fair share of risks.

 
While mortgages are not impossible to secure on auction properties, they can pose challenges due to the traditional timeline involved in obtaining one. Mortgage underwriters are accustomed to a conventional conveyancing process, where time constraints aren’t as stringent. In an auction scenario, the timeframe is considerably limited, and the lender may not be able to act as rapidly as necessary.

 
Moreover, mortgage lenders tend to be meticulous in reviewing the legal pack and the property’s title. They may request specific documents not readily available in the legal pack or require time-consuming procedures like an official local search from the council, which could take 2-4 weeks. Despite most auction sellers providing a personal search, lenders usually prefer official ones, potentially delaying the financing process.

 
Consequently, the ability to arrange a mortgage should be regarded as a bonus, rather than a given, when buying a house at auction.

 
Before proceeding, be sure to first check your property doesn’t fall into this list of 8 Types of Auction Properties That May Not Qualify for a Mortgage.

 
 
How to Buy a House at Auction with a Mortgage

 
For those determined to buy a house at auction with a mortgage (we salute you!), and we’ve compiled a list of practical steps to increase your chances of securing mortgage financing:

 
1. Ensure the property is habitable

A functioning kitchen and bathroom are prerequisites. ‘Habitable’ merely implies that basic living activities could be performed if necessary. It’s also essential that the property only contains one kitchen to avoid being classified as multiple dwellings, which could make it unsuitable for mortgage lending.

 
 
2. Ensure the legal pack is sound

Have a good property auction solicitor review the pack for potential issues that may concern a mortgage lender. A good solicitor can provide valuable advice, although they can’t provide guarantees.

 
 
3. Check the lease period

The property should have at least an eighty-year lease. Though there may be lenders willing to consider shorter leases, the choices are very limited.

 
 
4. Examine the building structure

Avoid non-standard constructions such as certain types of concrete-frame and steel-frame structures. Lenders may shy away from these types.

 
 
5. Consider the property location

Properties located above high-risk commercial entities like takeaways, restaurants, and car repair garages may be viewed negatively by lenders.

 
 
6. Evaluate building height and storeys

Lenders may have specific requirements about the number of storeys and the height of a property.

 
 
7. Assess your personal circumstances

Be certain your financial situation allows for obtaining a mortgage. Acquiring a decision in principle can classify you as a desirable borrower, subject to property due diligence.

 
Looking for Help with Mortgaging an Auction Property?

 
Get in touch and we’ll introduce you to our preferred mortgage broker!

Ultimately, the road to buying a house at auction with a mortgage may not always be smooth, but with careful planning and expert guidance, it’s certainly possible. Stay informed, stay proactive, and stay patient. After all, your dream property may be just one auction away.

 
In conclusion, it is entirely possible to buy a house at auction with a mortgage, albeit with certain caveats and challenges. Your bid to buy a house in auction with a mortgage can become a reality by taking the necessary precautions, carefully analyzing the property, and maintaining a positive rapport with lenders.

 
Still have questions on how to buy a house at auction with a mortgage?

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