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Buying a property at auction can feel exciting – the potential to secure a great property at a discount means auctions are a popular alternative for many property investors.
However, auctions still endure their own risks, which is where we can help – Here are our top tips!
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1. Get Expert Help From Your Adviser
Auction deadlines are tight — often you must complete the auction property purchase within about 28 days after winning the bid. These are very tight deadlines that your high street lenders wouldn’t be able to reach; you require a specialist lender.
We have access to specialist auction purchase lenders who offer specialist departments to meet these deadlines.
So before you bid, speak to a specialist broker, like Advocate Finance, who will know how to work within short timescales and find lenders who can move quickly. This helps make sure you can actually pay for the property if your bid wins.
2. Check the Property Legal Pack with a Solicitor
Each auction property comes with a legal pack — this contains the important documents associated with the sale, including title deeds, special conditions of sale, a registry search, a lease (if applicable), and other pertinent documents.
Before auction day:
- Give this pack to a solicitor early so they can check for legal risks — like missing paperwork, restrictions, or unusual obligations.
If there’s something in the legal pack that stops a lender from giving you a mortgage, and you haven’t checked it before bidding, you could lose your deposit.
3. Understand Your Finance Costs
Auction finance can come with costs you might not expect – using an experienced adviser to arrange the finance for you means you can relax, as they will ensure the following wouldn’t be an issue. However, if you have an inexperienced adviser or don’t use one, then you may have the potential for additional fees.
- Some loans have low introductory interest rates that double after 3 months.
- Some lenders charge a fee when you pay off the loan – this would be a percentage of the loan amount
- How is the interest charged? Interest might be charged monthly, not daily, which means if you settle a loan on day 1 of the start of the month, you pay 1 month’s interest, so timing matters.
Ask your broker to explain all costs clearly before you commit — especially if you plan to refinance into a standard buy-to-let mortgage later.
4. Set your Budget — and Stick To It
It’s easy to get caught up in the excitement of an auction, especially if there’s competition.
Before you bid:
- Work out what the right price is based on local property values and expected rental income.
- Decide your maximum bid and don’t go above it — otherwise you could end up paying more than the property is worth
- Remember: once the gavel falls, the price is final — you can’t negotiate later.
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How can Advocate Finance help?
Are you looking to Buy a Property at Auction? We can assist and find a solution to meet your needs!
We provide a FREE assessment on all our services.
Please contact me directly for more information, or use the Get in Touch With Us Today feature at the bottom of this page.
