Can you buy a property on auction with a mortgage?
Theoretically, yes, BUT mortgage lenders have, with few exceptions, struggled to fully underwrite and get their offer out in time for conveyancing to be completed in the timeframe required by auctions - usually 28 days, sometimes less. The same goes for most residential conveyancing solicitors, some are of the view that is impossible to complete in as little as four weeks.
In the post-Covid world where everything is taking longer to process, it is an even bigger struggle as both mortgage lenders and solicitors turnaround times have extended. We are seeing most mortgage lenders struggle to process to completions in under three months.
To use a mortgage to finance an auction purchase you would have to be mad, a blind optimist, or very ill-informed (take your pick!)
Cash or bridging finance have been the predominant ways to fund auction purchases with good reason.
Bridgers are uniformly geared to work fast, but very few solicitors are equipped to work at the speed required to complete the paperwork in the time available. That doesn’t mean it’s not possible, you just need the right people on the case.
We have repeatedly brokered bridging for auction purchases - start to finish - in 14 days. Our record was 5 days - including a weekend for a client who was close to the cut off date and was in danger of losing their deposit, when their projected mortgage lender failed to deliver.
Auctions are good places to find potential pots of profits - as long as you go prepared, having done your homework, have a clear maximum bid and a robust plan for finance.
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