You can often find low cost properties for sale at property auctions. Many properties sell for less than £100,000. Perhaps the cheapest house for sale is on Victoria Road, Fenton near Stoke-on-Trent, which is selling at an auction for a guide price of £1.
There are conditions for the buyer. The house needs extensive refurbishment. Stoke-on-Trent council is selling the house and their condition of sale is that the buyer must provide a detailed plan for the refurbishment work. The council does not want the house to remain empty for a long time, so has stipulated that the house must be fully restored within 12 months.
Extremely cheap houses are suitable for property developers, but individual buyers can also bid. Mortgage lenders will not provide a standard mortgage for houses that need modernising. Mortgages are only available for houses that are considered habitable. One strategy is to take out a bridging finance loan that can be used to both buy the property and finance the necessary refurbishment work. After the property is habitable, a mortgage can be applied for and the bridging loan repaid. If the home is for rent, then a buy to let mortgage is suitable.
If you purchase a cheap home that is suitable for a mortgage, the total purchase price must be paid 28 days after the auction, but a mortgage application can take longer than 28 days. A bridging loan can be used to complete the house purchase then repaid after the mortgage fund are available.