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High speed lenders …

A Lender Sitting Across a Table

THE QUESTION

I’m looking at buying at auction with a mortgage this month with an 8-week completion through my limited company.  I have a 30-35% deposit, but need to know which mortgage lenders have the quickest back office at the moment?

THE ANSWER

This is a 'how long is a piece of string'?  No mortgage lender has a consistent time frame for processing, processing times vary week to week, depending on the influx of applications received.  By the time you get to auction, the quickest when you posed the question may not be so quick if they have received a load of applications to process.

Big, big caveat - even if you use the fastest lender, you could still be scuppered by your choice of solicitor. 

Generally, solicitors have adapted poorly to post-Covid working practices (WFH etc.)  While your mortgage lender could be champing at the bit, your solicitor still be many weeks away from doing their part.  Result - you lose not only your 10% deposit, but also the £6K buyers fee the auctioneer charged you when you were the successful bidder.

Almost no one relies on a mortgage lender to fund an auction purchase - they use either cash or bridging finance.  If you feel up to taking a crack at it, be prepared for the white-knuckle ride it will, inevitably, be.

One last point - what condition of property are you thinking of buying at auction? This is really important, because BTL mortgages are only granted on ready to rent properties - with a pretty low tolerance for minor tarting up.

If you are thinking of buying a doer-upper at auction, the probability is you will blow several hundred pounds on a valuation fee to discover the valuer reports that it is in no fit state for a mortgage - then you are truly up the creek without a paddle - thousands of pounds committed to a deal with no way to fund it and only days until your completion deadline.

Be careful not to shoot yourself in the foot by jumping in unprepared in how you acquire and finance projects.  If you want to make auction purchases work, then you need to understand how to use bridging finance – and work with a solicitor that also understands how bridging finance works and can move much faster than normal conveyancing solicitors.

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