AUCTION MORTGAGES

You will require a mortgage to finance your home bid unless you are a cash buyer. The first step to securing a mortgage before attending an auction is to speak to a lender and find out what type of mortgage, they can offer you. Here at ams: we can act as an intermediary; we have access to a portfolio of lenders and will find the best lender for your needs.

We will develop a full understanding of your financial circumstances, including your upfront deposit and from this, we will approach the most suitable lenders for your needs. We will verify affordability and be able to present this on your behalf to lenders. We will still be able to help even if you have adverse credit such as CCJs, missed payments, etc., or if you work in certain job types such as a contractor or have been self-employed for less than two years.

Certain documents such as bank statements, pay slips, and other proof of identity will be needed to process your application. In most circumstances, we find a suitable lender and arrange a "mortgage in principle" (MIP), so that once you need finance to buy the mortgaged property there will be a signed contract in place. This means that you can proceed to the auction knowing that you have the funds to purchase the property.

Yes, obtaining a mortgage for an auctioned property is different from obtaining a conventional mortgage. When buying an auction property, the buyer will either make a conditional or unconditional offer.

The majority of lenders will ask for proof of income from your self-employed work dating back two or three years. The amount of time you need to be self-employed to qualify for a mortgage varies depending on the lender and the type of mortgage you are seeking. However, some organisations will be willing to lend if you only have one year’s worth of accounts to show.

An unconditional house auction in the UK is when a property is sold at auction without the buyer having to fulfil any conditions, such as obtaining a mortgage or proving that they are financially capable of buying the property. This type of auction is a fast and efficient way of selling a property as it eliminates any delays that may be caused by buyers being unable to meet the conditions of the sale.

If you place a winning bid on a property in an "unconditional" auction, you will need to pay an initial 10% deposit upfront. Buyers have only 28 days to pay the remaining 90% of the price after their bid is accepted. Buyers risk losing both the bid and the deposit if they miss this window.

A conditional house auction in the UK is a type of auction where potential buyers are required to submit an offer that is subject to certain conditions such as obtaining a mortgage or carrying out a survey. These offers are legally binding and if the seller accepts an offer the buyer must proceed to complete the purchase within the specified timeframe.

Occasionally, bridging loans may be needed in house auctions to cover the gap between the auction purchase price and the mortgage funds being released. The loan is typically secured against the property or another asset until the mortgage funds are released. This helps the buyer to purchase a property within the conditional terms and without having to use their own funds.

Mortgage lenders will seek to reduce risk, so YES, mortgage lenders do place restrictions on the type of properties that can be purchased at auction in the UK.

One of the benefits of working with ams: is that we work with lenders regularly, and they know we are working to find win:win partnerships between lenders and mortgage holders. Although lenders may place restrictions on auction properties such as the following, we will work on your behalf to obtain a mortgage offer. Restrictions may include the following:

• Properties must have a valid EPC (Energy Performance Certificate), a valid Gas Safety Certificate and a valid Electrical Installation Certificate
• Freehold is highly desirable, although long-term leaseholds may also be approved
• The property must have been subject to an independent survey before purchase
• The property must not be in poor condition (i.e., does not require any major repairs or renovations) and
• It may be more difficult to receive a mortgage offer in areas with high levels of crime

Before bidding on a property at auction, it is strongly advised that the buyer consults a property auction conveyancing solicitor to assess the contents of the auction pack. Although this may seem like an extra expense, it can help to avoid any costly mistakes in the long run.