Auction Property and Mortgages

Former Member

Right, so my boyfriend and i are vaguely looking into the idea of buying a house. Where we live we can't really afford to buy anywhere unless we buy at auction (or a teenytiny pokey one bedroom flat in a dodgy area).

So, my question is... how do mortgages work as far as buying at auctions go? I've got my agreement in principle from the bank, but it's for a 100% mortgage as i want to keep our capital behind for improvements on the property as most auction properties are in a bit of a state. If you have to put 10% of the property value down as a deposit, which would be possible because my parents have offered to lend it to us, would you then still get the 100% from the bank? Or would they see it as they only actually *need* to lend you 90%?

I tried to ask the person on the other end of the phone when i was enquiring about the mortgage, but as they employ trained monkeys at HSBC he wasn't too helpful.

Former Member

Sa-ra-ra-ra wrote: »

Right, so my boyfriend and i are vaguely looking into the idea of buying a house. Where we live we can't really afford to buy anywhere unless we buy at auction (or a teenytiny pokey one bedroom flat in a dodgy area).

So, my question is... how do mortgages work as far as buying at auctions go? I've got my agreement in principle from the bank, but it's for a 100% mortgage as i want to keep our capital behind for improvements on the property as most auction properties are in a bit of a state. If you have to put 10% of the property value down as a deposit, which would be possible because my parents have offered to lend it to us, would you then still get the 100% from the bank? Or would they see it as they only actually *need* to lend you 90%?

I tried to ask the person on the other end of the phone when i was enquiring about the mortgage, but as they employ trained monkeys at HSBC he wasn't too helpful.

At auction, they will want 10% on the day and normally insist on completion within 28 days.

But yes if you borrow 10% off your parents for the 28days the mortgage co will release 100% of the purchase price to your solicitors. They will send on 90% because the vendor already has 10% and you solictor will give you a cheque for the 10%.

However, you need to be very careful becuase the mortgage companies vauers will be going out after you have put the 10% down (i would imagine) and if they decide a. its not worth what you paying for it (unlikely as its an auction deal) or b. there not happy with the condition, they may decide not to lend the 100%. So it may be beneficial to get it valued before hand although if you don't get the property at auction this could get quite costly paying for val fees.

Former Member

Yeah, i'd get a full survey and valuation done before i bought anywhere - the survey cost is nothing when you think about how much damp, dry rot, wet rot and subsidance can cost to repair! I grew up in a house which at one point or another has had all 4 (not deprived childhood, my parents like doing up houses!) so i've become reasonably good at spotting them if it's major so i wouldn't need a survey done if it were bad, i just wouldn't touch it with a barge pole!

Thanks though

Former Member

deceelpool wrote: »

However, you need to be very careful becuase the mortgage companies vauers will be going out after you have put the 10% down (i would imagine)

I think you would need the survey done before the property reaches auction day and then the mortgage company will agree with you how much they will lend ie 100%. Don't put any money onto a house that you haven't had surveyed as the mortgage company might turn round and say that can't mortgage it for various reasons and then you will be stuffed.

Former Member

Yeah, i wouldn't put any money down at all unless i'd had a full survey done, including the valuation.