Q. My partner and I are looking to buy a repossessed property at auction as they are more affordable in the area we live in. My query is how do we obtain a mortgage on an auction property?

A. Buying property at auction is different to a conventional sale as the deal is binding at the fall of the hammer, where you are expected to hand over a 10% deposit. In a traditional deal, you are free to withdraw even if you have made an offer which has previously been accepted. If you fail to complete on an auction property with a 28 day period, you will lose your deposit.

I suggest that you contact several lenders well in advance of the auction date and ensure that you have satisfied their lending criteria and that they are willing to loan an appropriate sum of money “in principle.” Even if you do this, the offer will always be subject to a satisfactory survey by the lender so be prepared to have your intended auction property surveyed at your expense in advance of auction date. The risk with this is that even if you are able to borrow and the lender lend, you could still lose the property on auction day itself which would also mean you forfeit the cost of the lender’s valuation survey. Subject to the terms and conditions of the lender, you could also be liable for a hefty mortgage arrangement fee so check this aspect carefully with any potential lender. Good luck!

If you need further advice on obtaining a mortgage, take a look at our Mortgages & Finance centre on Primelocation.com.

Got a property question? Leave it in a comment and Barry will give you an answer.