Buying at auction, should I have finance in place beforehand?
Posted on 14 March 2014 by Elaine
I'm interested in buying a property at Auction, to do up and rent out. Would I need to be a cash buyer or could I raise a mortgage for the purchase. I would rather raise a mortgage with a large % of deposit. Would I need to have this in place before committing to buy at auction?
If you are buying at auction, you will need to put 10% down on the day, with typically 28 days to then complete the purchase, so I would reccomend that you have at least obtained a 'decision in principle' in place beforehand.
If you are looking to buy a property that requires work to get in a condition where it can then be rented out, we are most likely looking at you taking out a bridging loan, and then once the work's been completed and the property's ready to let out, we can then remortgage you onto a standard Buy To Let product.
It's also crucial to know what rent will be achievable, as this could have an impact on the Buy To Let lenders available to you. Most lenders work on the rent needing to cover 125% of the monthly mortgage payment based on a notional rate of 5%.
If you'd like to discuss your options in more detail, then please contact one of our consultants on 0344 346 3672 and they'll be able to give you an idea of how we can help.
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Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
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