There are a number of possible problems when purchasing property at auctions. One of the most common issues after winning an auction is that the property must be paid for within 28 days. Unless you are a cash buyer, you will need to borrow money for the purchase. Many mainstream banks can take more than 28 days to process a mortgage application which means that the funds will arrive too late to complete the purchase. The solution is to still apply for a mortgage, but use a short-term bridging loan to complete the purchase. As soon as the mortgage funds are available, then the bridging loan can be repaid. Another problem can be delays in legal work. It helps to use a solicitor experienced in property auctions. He or she will make sure that all the conveyancing work is finished before the purchase completion date. Guide prices are not necessarily the cost of the winning bid. Some property will go for more than the guide price. As long as the price paid is not above the market price, then this is fine. Some people new to property auctions obtain a loan agreement in principle, but only for guide prices. It is better to arrange a loan for more than the guide price in case you want to bid higher. Buying property at an auction is a good way to buy provided you are aware of potential problems and how to solve them.
May 10, 2022
