Raising finance to buy property at auction is a never ending nightmare. To be blunt, it’s the reason why most people do NOT buy at auction.
If you successfully bid on the day you give a 10% deposit and exchange contracts. Then 28 days later (sometimes 14 days) you have to come up with the rest of the dosh.
Which is where the lender comes in – as they are providing some of that “rest of dosh” to pay for the property sale completion.
In theory, this should be quite straightforward. In theory.
To be honest 28 days (in my mind) is plenty of time for the valuer to visit the property and report back to the lender if the property is suitable security. The solicitor then needs to do his various checks and bits and bobs (I am not a qualified solicitor so although I don’t really understand their various paper shuffling exercises, I do know it’s EXTREMELY important). And then he in turn also reports to the lender. And then the offer gets sent, gets accepted and funds are released. In this age of instant banking, funds can be sent the same day.
In this day of “the internet” emails, reports and any sort of documentation can be sent instantly.
But for some reason everything takes a l-o-n-g time.
Which is why, if you are looking to buy a property at auction, and you need to raise finance, it is always best to have an application for finance (and preferably an offer) before you bid.
Because the fact is, for some unknown reason, valuers, banks and solicitors seem to do a whole load of unseen-yet-important-paper-shuffling-stuff before you get your monies released.
That means anything which may add to this, needs to be done beforehand so you do not add any more to the “unseen yet incredibly important paper shuffling” because otherwise you will most likely blow your chances of completing on time.
If you are thinking of buying property at auction and want to raise finance for the purchase – my advice: speak to a broker beforehand. Submit a provisional application and get indicative terms of business and willingness to lend. Where possible, it’s best practice (although will cost you more) submit a full application and get the property valued before auction and a mortgage offer in hand.
That way when you bid, you know you have the money to buy and the best chance of auction success!