Every week the 2mtrust Financial Advisers have a training session to discuss a financial topic and share their own experiences with the team.2mtrust Mortgage and Protection Adviser Catherine Bockett delivered a training session focussed on Auction Properties which we thought was a great resource for our lovely clients who may be interested in purchasing a property through an auction.
We asked Catherine to share her expertise and this is what she had to say:
Are you considering buying a property at auction? My experience tells me the most important thing is to be prepared!
The property auction process has changed over the years, to what is now called the “Modern Method of Auction”.
This allows interested parties to submit bids online over typically a 14-30 day period, before the auction closes and the highest bidder wins. If you are new to property auctions, this is less daunting than the traditional method of bidding in person on the day.
If you are interested in buying via auction, you will have to pay for a seller’s pack, which contains property details, searches, and sometimes a survey of the property. You can arrange to view the property before bidding.
So far, so good…
When the auction ends, if you are the successful bidder you will have to pay certain costs immediately: an auction/reservation fee of 2-5% of the purchase price; a deposit; and usually a contribution towards the seller’s legal fees.
Be aware that the reservation fee is on top of the purchase price, and is liable to stamp duty!
None of these costs is refundable if you pull out, and none of them can be funded by a mortgage, so you have to have funds upfront to cover them.
How long does it take to purchase an auction property?
If your bid is successful, you will have 28 days to exchange contracts with the seller, and a further 28 days to complete the purchase. This allows more time than the traditional method of auction to get a mortgage in place for the purchase, but can still be challenging.
It is really important that you have your 2mtrust Financial Adviser involved as early as possible in the process, to guide you through as smoothly as possible and avoid potentially costly mistakes. These are mainly the additional costs mentioned above, which most clients don’t think of on top of the property purchase price.
Your 2mtrust Financial Adviser may be able to have a mortgage offer in place for you before the auction completes - if we are involved from the outset, your chances of successfully completing the purchase and mortgage within the timescale are hugely enhanced.
So before you make a bid, book an appointment with your 2mtrust Financial Adviser, like Catherine Bockett, who will help you make a clear decision, support you through the journey and ensure the process is as smooth as possible for you.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH REPAYMENTS ON YOUR MORTGAGE
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