Mortgage Finance at Auction

WeeCuppaCha

After finding a house I like and preparing myself to bid at auction (BidX), I have been informed that my mortgage provider, ICS, do not finance auction properties. FML.

I now have to get my solicitor to stop perusing the legal pack as it’s a waste of time. I’m also back to square one searching for something that doesn’t exist in an area with piss poor supply. To say I’m unhappy is an understatement.

Anyone else come across this with their mortgage providers? Thankfully I found this out before going down the road of paying out for a survey or even going ahead and bidding!

wassie

ICS do finance auctions but that product is aimed for the buy-to-let purchaser. I assume your looking to owner occupy.

Buying at auction is very different than a negotiated sale. At the fall of the hammer, an unconditional contract for sale of house is effectively formed which could carry risks for the purchaser and subsequently lender. Hence why you need to agree this with the lender in the first instance.

I am surprised that your solicitor didn't ask this of you in the first place.

Claw Hammer

WeeCuppaCha wrote: »

After finding a house I like and preparing myself to bid at auction (BidX), I have been informed that my mortgage provider, ICS, do not finance auction properties. FML.

I now have to get my solicitor to stop perusing the legal pack as it’s a waste of time. I’m also back to square one searching for something that doesn’t exist in an area with piss poor supply. To say I’m unhappy is an understatement.

Anyone else come across this with their mortgage providers? Thankfully I found this out before going down the road of paying out for a survey or even going ahead and bidding!

Most likely you won't get a mortgageable title from Bidx1. Not surprisingly, your bank won't finance it.

hurikane

I was under the impression that it’s cash only for those auctions?

More often than not it’s property that banks wouldn’t lend for that’s being sold.

WeeCuppaCha

The solicitor is/was looking at the legal pack to ensure there is no issue with title etc. The house is in receivership. I know the area/estate well and there are no concerns with the property structurally or otherwise:

Houses can be bought with a mortgage at auction, but you really need to have your ducks in a row prior to bidding. As previously mentioned, once you ‘win’ at auction, you have a finite amount of time to close; 3 to 4 weeks. Today’s information comes off the back off me ensuring I had all those ducks lined up. Which I can’t do now. No mortgage, no house.

Maybe it’s because it’s a PPR? I’m not sure what difference it makes if you’re getting a mortgage to rent a house or live in a house though?

Claw Hammer

WeeCuppaCha wrote: »

ose ducks lined up. Which I can’t do now. No mortgage, no house.

Maybe it’s because it’s a PPR? I’m not sure what difference it makes if you’re getting a mortgage to rent a house or live in a house though?

It is nothing to do with a PPR. A mortgage might be given to a buy to let investor using another property as collateral.

If you look at the contract online, the receiver will have excluded all liability for all kinds of things. Typically the receiver was a nose nothing about family home declarations, planning, boundary disputes with neighbours and will take no personal liability for any statement made.

WeeCuppaCha

An update on this. It transpires that the bank will
approve mortgage on auction property, assuming all legals are in order. My solicitor is looking at the legal pack to ensure all is present and correct in that respect.

BidX/vendors solicitors are stipulating a 3
Week closing time from date of auction. Assuming I am the highest bidder, how realistic is it to proceed to full mortgage approval in this timeframe. Throwing solicitors’ holidays into the mix.

There should be no issue in regards to my earnings being affected by Covid etc as I’m public service. Although, from reading around, it seems banks are really trailing their heels for some at present...

I’m wondering if anyone knows anything about what happens if you cannot close at the 3 week deadline. I know one (scary) option is that you lose your deposit, end of story. It has also been mentioned that you would incur interest for every day late paying until closing. The latter, although sickening, would be a more palatable option.

I guess I’m just trying to weigh it all up before throwing my hat into the ring and would be very grateful for any or all advice and opinion.

SozBbz

WeeCuppaCha wrote: »

An update on this. It transpires that the bank will
approve mortgage on auction property, assuming all legals are in order. My solicitor is looking at the legal pack to ensure all is present and correct in that respect.

BidX/vendors solicitors are stipulating a 3
Week closing time from date of auction. Assuming I am the highest bidder, how realistic is it to proceed to full mortgage approval in this timeframe. Throwing solicitors’ holidays into the mix.

There should be no issue in regards to my earnings being affected by Covid etc as I’m public service. Although, from reading around, it seems banks are really trailing their heels for some at present...

I’m wondering if anyone knows anything about what happens if you cannot close at the 3 week deadline. I know one (scary) option is that you lose your deposit, end of story. It has also been mentioned that you would incur interest for every day late paying until closing. The latter, although sickening, would be a more palatable option.

I guess I’m just trying to weigh it all up before throwing my hat into the ring and would be very grateful for any or all advice and opinion.

Humm.... bad time of the year for this OP. Solicitors will take some or all of August off so it would be worth finding out how firm that 3weeks is.
Also ask your particular solicitor what his/her plans are.

jill_valentine

I wish I could filter BidX1 out of property searches, it's an awful pain in the face trying to trawl past their stuff trying to find something that's usefully on the market.

brisan

jill_valentine wrote: »

I wish I could filter BidX1 out of property searches, it's an awful pain in the face trying to trawl past their stuff trying to find something that's usefully on the market.

There is always a reason a property is for sale at auction and not on the open market,and its never a good reason for potential buyers

brisan

brisan wrote: »

There is always a reason a property is for sale at auction and not on the open market,and its never a good reason for potential buyers

I’d argue it is. The benefit of buying at auction is that you are usually buying at a considerably lower price than a conventional sale. If you know what you are doing, there is huge benefits to this type of purchase.

Thierry12

Dav010 wrote: »

I’d argue it is. The benefit of buying at auction is that you are usually buying at a considerably lower price than a conventional sale. If you know what you are doing, there is huge benefits to this type of purchase.

What's the benefit to the seller then?

Who would want to sell at lower price?

Graham

Thierry12 wrote: »

What's the benefit to the seller then?

Quick sale without having to remediate anything.

Pinoy adventure

WeeCuppaCha wrote: »

The solicitor is/was looking at the legal pack to ensure there is no issue with title etc. The house is in receivership. I know the area/estate well and there are no concerns with the property structurally or otherwise:

Houses can be bought with a mortgage at auction, but you really need to have your ducks in a row prior to bidding. As previously mentioned, once you ‘win’ at auction, you have a finite amount of time to close; 3 to 4 weeks. Today’s information comes off the back off me ensuring I had all those ducks lined up. Which I can’t do now. No mortgage, no house.

Maybe it’s because it’s a PPR? I’m not sure what difference it makes if you’re getting a mortgage to rent a house or live in a house though?

How much are you paying too have the legal pack reviewed ?
There will always be clauses in the legal pack that are picked up.
Make sure you clear all these up befour bidding as it can lead too trouble for you.
You can pay cash or by mortgage for an auction property but bank will insist on
A clean title for the said property.
3 weeks is plenty of time for buying so Make sure you have everything g ready too go prior too auction.
Online auction,make sure you refresh your browser befour 4 the auction begins and don't get carried away bidding.
Best of luck.

WeeCuppaCha

Thierry12 wrote: »

What's the benefit to the seller then?

Who would want to sell at lower price?

The property in question is in receivership, not being sold by its previous owner. It’s a forced sale. I don’t think the bank are so hung up on getting top euro, they want a quick sale.

WeeCuppaCha

Pinoy adventure wrote: »

How much are you paying too have the legal pack reviewed ?
There will always be clauses in the legal pack that are picked up.
Make sure you clear all these up befour bidding as it can lead too trouble for you.
You can pay cash or by mortgage for an auction property but bank will insist on
A clean title for the said property.
3 weeks is plenty of time for buying so Make sure you have everything g ready too go prior too auction.
Online auction,make sure you refresh your browser befour 4 the auction begins and don't get carried away bidding.
Best of luck.

Some useful advice here, thank you.

Claw Hammer

WeeCuppaCha wrote: »

An update on this. It transpires that the bank will
approve mortgage on auction property, assuming all legals are in order. My solicitor is looking at the legal pack to ensure all is present and correct in that respect.

BidX/vendors solicitors are stipulating a 3
Week closing time from date of auction. Assuming I am the highest bidder, how realistic is it to proceed to full mortgage approval in this timeframe. Throwing solicitors’ holidays into the mix.

There should be no issue in regards to my earnings being affected by Covid etc as I’m public service. Although, from reading around, it seems banks are really trailing their heels for some at present...

I’m wondering if anyone knows anything about what happens if you cannot close at the 3 week deadline. I know one (scary) option is that you lose your deposit, end of story. It has also been mentioned that you would incur interest for every day late paying until closing. The latter, although sickening, would be a more palatable option.

I guess I’m just trying to weigh it all up before throwing my hat into the ring and would be very grateful for any or all advice and opinion.

If you cannot close on time, your deposit is forfeit and you can be sued for the difference if the house sells for less with 12 months. You may be able to extend the closing date by pay.ing interest from the date of the contract

Most likely your solicitor will only be able to give a qualified certificate of title which most likely the bank won't accept.

Auction buying is not for widows and orphans.

WeeCuppaCha

Claw Hammer wrote: »

You may be able to extend the closing date by pay.ing interest from the date of the contract

Most likely your solicitor will only be able to give a qualified certificate of title which most likely the bank won't accept.

Auction buying is not for widows and orphans.

Yes, it seems that there is an extension period which is liable for interest. While not ideal, if the house is sold at the right price, this gives me a bit of wiggle room to get it over the line.

The issue of title is yet to be confirmed as my solicitor is still going through it. Obviously I won’t proceed if it is unqualified or ultimately unmortgagable.

The situation is both terrifying and exciting. In an area where the market is completely stagnant, I can’t completely rule this house out just yet.

Gonna be an interested week.

Pinoy adventure

WeeCuppaCha wrote: »

Yes, it seems that there is an extension period which is liable for interest. While not ideal, if the house is sold at the right price, this gives me a bit of wiggle room to get it over the line.

The issue of title is yet to be confirmed as my solicitor is still going through it. Obviously I won’t proceed if it is unqualified or ultimately unmortgagable.

The situation is both terrifying and exciting. In an area where the market is completely stagnant, I can’t completely rule this house out just yet.

Gonna be an interested week.

You say your solicitor is still going true it.
It only takes 30-45mins too review a legal pack.
If they are taking there time there may be quite a few issues but don't let that put you off.
A recent property which I dealt with there was 12 issues raised which took a lot of time back & forth with the auctioneer and the bank who were selling it.

WeeCuppaCha

Pinoy adventure wrote: »

You say your solicitor is still going true it.
It only takes 30-45mins too review a legal pack.
If they are taking there time there may be quite a few issues but don't let that put you off.
A recent property which I dealt with there was 12 issues raised which took a lot of time back & forth with the auctioneer and the bank who were selling it.

It’s more that she is trying to fit in doing this for me around other work as I was late in the day deciding to proceed. From initial checks, there doesn’t seem to be any major issues, so hopefully she’ll be able to give me the green light. Time is the major issue I have due to wrong advice given by my broker in the first instance. Auction is on Tuesday.

Claw Hammer

WeeCuppaCha wrote: »

It’s more that she is trying to fit in doing this for me around other work as I was late in the day deciding to proceed. From initial checks, there doesn’t seem to be any major issues, so hopefully she’ll be able to give me the green light. Time is the major issue I have due to wrong advice given by my broker in the first instance. Auction is on Tuesday.

I can't see how there won't be major issues in the legals if the property isn't in receivership.

Claw Hammer

Claw Hammer wrote: »

I can't see how there won't be major issues in the legals if the property isn't in receivership.

I know you brought this up in another thread, but the legal issues, though likely to be a little more work than a standard sale, are by no means insurmountable. I have bought at auction a few times and though there is always a bit of extra time and effort needed, there was no major issues.

Do you mind me asking what your experience in this is, and what problems you encountered?

Claw Hammer

Dav010 wrote: »

I know you brought this up in another thread, but the legal issues, though likely to be a little more work than a standard sale, are by no means insurmountable. I have bought at auction a few times and though there is always a bit of extra time and effort needed, there was no major issues.

It is not a question of more work. What can be done if there is a special condition excluding the vendor from liability if there is no adequate family Home declaration? The conditions put in by receivers have all sorts of exclusions. Here is one from an auction 6 months ago
"Title to the Subject Property shall comprise the documents listed in the “Title” section of the Document Schedule, and the Vendor shall not be required by the Purchaser to produce anyfurther documents pertaining to the title. General Condition 6 is read subject to this Special Condition.
4.2 Without prejudice to the generality of the preceding provisions of this Special Condition thePurchaser Accepts that it has been furnished with all Family Home Declarations on title in the Vendor’s possession. No further or other Family Home Declaration shall be called for or produced other than a Family Home Declaration to be executed by the Vendor which shall
be substantially in the form of the draft Declaration furnished herewith. "


What happens if a married woman turns up and says that the property was at one time her family home and it was mortgaged or sold without her written consent?

Claw Hammer

Claw Hammer wrote: »

It is not a question of more work. What can be done if there is a special condition excluding the vendor from liability if there is no adequate family Home declaration? The conditions put in by receivers have all sorts of exclusions. Here is one from an auction 6 months ago
"Title to the Subject Property shall comprise the documents listed in the “Title” section of the Document Schedule, and the Vendor shall not be required by the Purchaser to produce anyfurther documents pertaining to the title. General Condition 6 is read subject to this Special Condition.
4.2 Without prejudice to the generality of the preceding provisions of this Special Condition thePurchaser Accepts that it has been furnished with all Family Home Declarations on title in the Vendor’s possession. No further or other Family Home Declaration shall be called for or produced other than a Family Home Declaration to be executed by the Vendor which shall
be substantially in the form of the draft Declaration furnished herewith. "


What happens if a married woman turns up and says that the property was at one time her family home and it was mortgaged or sold without her written consent?

But issues like that can apply to any sale. While I agree with you that there is almost always a good reason why a house is being sold at auction rather than a standard sale, the seller and auction house do their best to have the legal pack in order and yes, it sometimes requires more work than a standard sale, but that is why we engage solicitors to do the legal work.

Buying from a Reciever comes with slightly different conditions and declarations/assurances (condition 36) than a standard sale, but your solicitor will know this and be able to advise.

As the op has posted, banks will finance auction purchases, provided the solicitors can sort through the issues. What is your experience with this?

Claw Hammer

Dav010 wrote: »

But issues like that can apply to any sale. While I agree with you that there is almost always a good reason why a house is being sold at auction rather than a standard sale, the seller and auction house do their best to have the legal pack in order and yes, it sometimes requires more work than a standard sale, but that is why we engage solicitors to do the legal work.

Buying from a Reciever comes with conditions and declarations than a standard sale, but your solicitor will know this and be able to advise.

As the op has posted, banks will finance auction purchases, provided the solicitors can sort through the issues. What is your experience with this?

They don't apply to any sale. In a normal sale there will be a full record of family home declarations. I asked you what would happen if a married woman turns up and says that the property was at one time her family home and it was mortgaged or sold without her written consent.

You haven't answered but have faffed around saying it could happen in any sale and that a solicitor will be able to advise.

What happens is that the sale will be voided. The o/p would lose the house and the bank who lent him the money would lose its security.
How can any solicitor tell the o/p to go ahead and tell the bank it is alright in those circumstances?

Claw Hammer

Claw Hammer wrote: »

They don't apply to any sale. In a normal sale there will be a full record of family home declarations. I asked you what would happen if a married woman turns up and says that the property was at one time her family home and it was mortgaged or sold without her written consent.

You haven't answered but have faffed around saying it could happen in any sale and that a solicitor will be able to advise.

What happens is that the sale will be voided. The o/p would lose the house and the bank who lent him the money would lose its security.
How can any solicitor tell the o/p to go ahead and tell the bank it is alright in those circumstances?

Claw Hammer, neither you nor I are solicitors, so I can’t answer legal questions. That is why I, and the op, pay a solicitor to advise us on the legalities of a house purchase at auction.

Claw Hammer

Dav010 wrote: »

Claw Hammer, neither you nor I are solicitors, so I can’t answer legal questions. That is why I, and the op, pay a solicitor to advise us on the legalities of a house purchase at auction.

You have been telling the op that there may not be much to worry about.
The clause I have quoted is from a BiDX1 Auction contract and is one of may such clauses in the special conditions.
I have absolutely no doubt that there is an identical or similar clause in the contract for the house the o/p is interested in.

Here is another clasuse typical of such sales

" Strictly without prejudice to the foregoing and to the deletion of General Condition 24 and 25, on completion the Vendor shall provide the Purchaser with a map of the Subject Property in the form of the map referred to in the Documents Schedule. As per Special Condition 9, the Vendor offers no
warranty or representation in relation to the accuracy of the map or the boundaries identified on the said map"

What happens if the map is wrong or erroneous in some way and it turns out that a neighbouring occupier is planning to start a dispute about the boundaries?

At least you have now admitted that you do not know what you are talking about and that your previous experience does not offer a guide to the o/p

Claw Hammer

Claw Hammer wrote: »

You have been telling the op that there may not be much to worry about.
The clause I have quoted is from a BiDX1 Auction contract and is one of may such clauses in the special conditions.
I have absolutely no doubt that there is an identical or similar clause in the contract for the house the o/p is interested in.

Here is another clasuse typical of such sales

" Strictly without prejudice to the foregoing and to the deletion of General Condition 24 and 25, on completion the Vendor shall provide the Purchaser with a map of the Subject Property in the form of the map referred to in the Documents Schedule. As per Special Condition 9, the Vendor offers no
warranty or representation in relation to the accuracy of the map or the boundaries identified on the said map"

What happens if the map is wrong or erroneous in some way and it turns out that a neighbouring occupier is planning to start a dispute about the boundaries?

At least you have now admitted that you do not know what you are talking about and that your previous experience does not offer a guide to the o/p

What is your problem here?

You are telling people that banks won’t lend for auction sales, they will, the op has confirmed that the bank will provide finance, and that all sorts of bad things could happen. Again, you are giving dubious legal opinions without having any experience apparently. Buyers engage solicitors, you trust your solicitor to sort through the issues and if there is a problem with the title that your solicitor can’t overcome, they will advise you of it.

I do not know about the legalities of this, I am not a solicitor, but neither are you. I have the good sense to acknowledge this and engage professional advice.

Graham

Wouldn't you or your solicitor check the boundaries/maps before bidding?

Graham

Graham wrote: »

Wouldn't you or your solicitor check the boundaries/maps before bidding?

Yes.

arctictree

Graham wrote: »

Wouldn't you or your solicitor check the boundaries/maps before bidding?

I bought 2 properties at auction. The first one had no problems.

The 2nd one, there was a boundary issue that took 9 months to sort. After 6 months of legal back and forth, I got sick of it and turned up at the neighbours door where we had a chat and staked out the boundary. Maps were modified with the land registry and the sale went through.

WeeCuppaCha

arctictree wrote: »

I bought 2 properties at auction. The first one had no problems.

The 2nd one, there was a boundary issue that took 9 months to sort. After 6 months of legal back and forth, I got sick of it and turned up at the neighbours door where we had a chat and staked out the boundary. Maps were modified with the land registry and the sale went through.

Can I asked if it took 6 months to close, how you avoided severe penalty? The quick closing date is one of my biggest concerns. Boundaries, not so much. It’s a semi d on a well established estate with fenced in plots. But obviously I would expect all of the above to be confirmed by my solicitor before proceeding.

arctictree

WeeCuppaCha wrote: »

Can I asked if it took 6 months to close, how you avoided severe penalty?

To be honest, i don't really remember. The solicitors were just taking ages going back and forth and the official closing date just slipped by.

Claw Hammer

Dav010 wrote: »

What is your problem here?

You are telling people that banks won’t lend for auction sales, they will, the op has confirmed that the bank will provide finance, and that all sorts of bad things could happen. Again, you are giving dubious legal opinions without having any experience apparently. Buyers engage solicitors, you trust your solicitor to sort through the issues and if there is a problem with the title that your solicitor can’t overcome, they will advise you of it.

I do not know about the legalities of this, I am not a solicitor, but neither are you. I have the good sense to acknowledge this and engage professional advice.

I never said that the banks would lend for auction sales. The banks will end in any kind of a sale provided they get a certificate of title from a solicitor. In the case of a receivership, quite often a solicitor cannot give a certificate of title. This is because of the exclusion clauses receivers put in their contracts. The broker was perfectly correct in what he told the OP. He quite rightly foresaw that there would be no sale resulting.

Claw Hammer

Graham wrote: »

Wouldn't you or your solicitor check the boundaries/maps before bidding?

In a normal sale, certificate of identity is provided and the owner is asked whether or not there is any dispute about boundaries in being. If the owner tells a lie, he and possibly his solicitor can be sued afterwards. In the case of a receiver, the receiver says he doesn't know if there are any boundary disputes and says he won't stand over any map that is provided.
No bank wants to advance funds for the purchase of a property only to find that a dispute about boundaries eruupts afterwards with consequential effects on the banks security.

lomb

I bought one with predecessor of Bidx and the boundary was through the apartments only bathroom. Obviously the bathroom was part of the apartment being sold. The solicitor spent around 5 months with the land registry and the other solicitor sorting it out and no interest was charged afaik. It was a cash purchase and I knew about it prior. They screwed up the area and stated it at something like 49 sq m when it was 35 . I also paid too much as wanted it and others were looking at misstated area.
I would double check everything if doing it again.

drunkmonkey

How's the bidding going, was looking at a buy to let myself there today but it's gone way over what I think it's worth...

WeeCuppaCha

drunkmonkey wrote: »

How's the bidding going, was looking at a buy to let myself there today but it's gone way over what I think it's worth...

Hi, well homes under the hammer it ain’t! Very slow, only a couple of bids so far. I’m just sitting on my hands for now, as I’m sure are most other interested parties. Couple of hours until it closes so I’m just going to wait and see where it goes. If it’s meant to be it’ll be.

drunkmonkey

Best of luck, wait until late as possible, good few bidders on the one I'm watching only a few minutes left, all value is gone out of it now, Guiding for 70k currently 103k.

WeeCuppaCha

Yeah, I reckon it’s gonna be a flurry of activity in the last 5-10 minutes. This one is very much under valued looking at PPR over recent times. I’ll just keep checking in and play it by ear. I’m not too emotionally invested so very much letting my head rule on this.

Sorry to hear yours didn’t work out. There will always be a next time.

drunkmonkey

Just sold there for 137k most of the bidding happened in the last 60 seconds, clock resets to 60 seconds every time someone bids.