Auction property can be bought using a buy-to-let mortgage, and there are a few different ways to do it. If an auction property is ready to let as it stands, a standard buy-to-let mortgage may be available from day one. Property that needs work first often takes the specialist lending or bridging route. Foxtons list property of all conditions for auction, so you can choose the location, the property and the commitment that suits your goals.
Buy-to-let mortgages on ready-to-let auction property
Buy a ready-to-let property at auction and the mortgage can be refreshingly boring. Alexander Hall, our partner mortgage broker, say: for a property that's ready to let as it stands, a standard buy-to-let mortgage may be available from day one.
We're all set up to enable bidding on a mortgage at Foxtons Auctions. We pre-qualify everyone before they bid, and for mortgage buyers that means a buying deposit and a mortgage in principle (also known as agreement in principle or AIP). A mortgage in principle is an indication of what a lender could lend you, based on a first look at your finances, and it's how you show us your bid is genuine.
Cash buyers and bridging finance at auction
Lenders can be a bit strict about kitchens. A house without a working one won't get a standard mortgage, and a typical auction catalogue is full of property that needs work before anyone can live in it. That's where auction gets its reputation for cash buyers and bridging, the short-term finance that covers a purchase while the work gets done.
Ours is a different catalogue. We introduce our own sellers to auction when they want a quicker timeline, so you'll find just about anything in it, from renovation projects to family homes and flats that are ready to let.
Auction property finance: ready to let or needs work
Start with one question: could a tenant move in as it stands? If not, or if there's something unusual about the property, like a short lease, it's probably a specialist lending case.
| Ready to let | Needs work | |
|---|---|---|
| The property | A tenant could move in as it stands | Needs work before anyone can live in it |
| The finance route | A standard buy-to-let mortgage may be available from day one | Specialist lending or bridging to buy it and do the work, with a plan to refinance once it's ready to let |
| Your first move | Get an agreement in principle before you view | Talk to Alexander Hall before you bid |
Mortgage timing when you buy before auction day
Most Foxtons auction sales are agreed before auction day, through a prior auction bid. You bid before the auction, and if the seller accepts, the price is agreed between the two of you. Otherwise, auction day is the final deadline: contracts exchange on the winning bid, and completion follows within 20 days.
An accepted prior-auction bid does not take the property off the market. Viewings continue and the property remains available until exchange, so the buyer who reaches exchange first secures the purchase. In practice, that means getting from accepted bid to mortgage offer as quickly as possible.
"We very rarely run a live auction, which is why my advice to any landlord is to get your finances in order before you view, then put in a prior auction bid. If it's accepted, you want a good broker for the speed and for the service."
Joe Darnell
Director of Foxtons Auctions
Alexander Hall are built for exactly that. We asked Stephanie Daley, Director of Partnerships at Alexander Hall, how quickly a mortgage in principle can be done. She said a few hours on a standard property where necessary, but recommends allowing 48 hours if your case is more complex or needs a conversation with a lender upfront.
Once your bid's accepted, they get your full application in and push it through mortgage valuation and underwriting at auction pace. That speed is particularly valuable in two situations:
Competing buyers
After your bid is accepted, every day counts. A broker who can move quickly through decision in principle, application and underwriting gives you the best chance of reaching exchange before anyone else.
Specialist lending
Unusual properties often require specialist lenders. An experienced broker can identify the right lender quickly and get your application in front of them without delay.
The full legal pack is available from the start, allowing your solicitor to begin reviewing the property before you bid. Our guide to buying a home at auction explains why it pays to bring them in early. Our auction team will help you prepare for whichever property you choose.
Source: This article draws on the Foxtons Auctions team, who take our auction sales from prior bid to exchange, and on Alexander Hall, our partner mortgage broker, who handle buy-to-let and specialist lending for landlords. If you have any questions on this article, email us to ask a Foxtons expert.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Mortgage availability depends on your circumstances, affordability assessment, credit status and the property's suitability for lending. Not all auction properties will be eligible for standard mortgage finance. Bridging finance is a specialist form of borrowing that can be more expensive than a traditional mortgage and is not suitable for everyone.
Buying at auction can involve financial and legal risks. Buyers should review the legal pack carefully and obtain independent legal and financial advice before bidding. Timescales are illustrative only and may vary depending on lender, the property, legal requirements and your personal circumstances.
