Yes, you can! Purchasing a property at auction with a mortgage is entirely possible — and with the right preparation, it can be a fantastic way to secure a home or investment property below market value. However, there are a few important considerations to keep in mind before bidding.

When Is an Auction Property Not Mortgageable?

Lenders have specific criteria that a property must meet before they’ll approve a mortgage. Some issues that could make a property unmortgageable include:

• Evidence of wet or dry rot
• Presence of Japanese knotweed
• Structural defects or significant disrepair
• Location near mining areas, landfills, or flood zones
• Leasehold properties with a short lease
• Derelict buildings or those partially uninhabitable
• Non-standard construction (e.g., timber frame, prefab, concrete)

A Tip for Investors

If you’re buying to rent or live in the property, make sure it is immediately habitable and preferably freehold or with a long lease. Properties with sitting tenants can also be tricky — some lenders may refuse to issue a mortgage, depending on the tenancy type.

How to Buy a Property at Auction with a Mortgage

Unlike buying through an estate agent, purchasing at auction involves strict deadlines — and this is where preparation really matters.

56-Day Completion (Unconditional Auction Sale)

Most suitable for mortgage buyers, an unconditional auction sale with a 56-day completion window works like this:

• 5% deposit and buyer’s premium are paid immediately after your winning bid.
• You’ll need to exchange contracts right away.
• The balance must be paid within 56 days.

Since mortgage approvals can take 2–6 weeks, this time frame gives buyers a better chance to complete. But remember — if you miss the deadline, you risk losing your deposit and buyer’s premium, and could be liable for resale costs.

Conditional Auction Sale (60-Day Exclusivity)

A conditional auction sale gives you more breathing space:

• After winning, you pay a reservation fee (instead of exchanging contracts).
• You’ll receive a 60-day exclusivity period to arrange your mortgage and carry out surveys.
• The seller cannot accept any other offers during this period.

If you don’t complete within this timeframe, you’ll likely lose your reservation fee and may face legal consequences.

What If My Mortgage Isn’t Ready in Time?

If your mortgage provider can’t release funds within the completion deadline, you may consider a short-term bridging loan to cover the upfront costs. Bridging finance typically carries higher interest rates, so it should only be used as a temporary solution.

At Town & Country Property Auctions, we work with Together to offer flexible auction finance options.

Additional Costs to Consider

Don’t forget to factor in all associated costs when budgeting:

• Buyer’s premium or reservation fee
• 5–10% deposit
• Stamp Duty Land Tax (SDLT)
• Solicitor/legal fees
• Any other fees listed in the legal pack

Can the Bank Withdraw a Mortgage Offer?

Yes — a mortgage in principle is not a guarantee. Always wait for your full mortgage offer before committing too far. If you bid more than your lender’s agreed amount, you’ll need to cover the difference yourself.

What If I’m Buying a Renovation Project?

If you’re buying a property to renovate, it must be habitable to qualify for a mortgage. This typically means:

• A functioning kitchen and bathroom
• No major structural issues

If the property is uninhabitable, your best options are:

• Buying with cash, or
• Taking out a commercial or bridging loan to carry out repairs.

Once the property meets mortgage standards, you can refinance it with a standard mortgage.

Preparation Is Key: Buying with a Mortgage at Town & Country Property Auctions

If you’re planning to finance your auction purchase with a mortgage, early preparation is crucial.

What to Do:

1. Browse our auction catalogue (released 2–4 weeks before each event) and select your property.
2. Arrange viewings and review the legal pack thoroughly.
3. Secure a decision in principle from your lender ahead of time.
4. Ensure funds are ready for your deposit and fees.
5. Plan for contingencies — such as needing a bridging loan or additional funds if bidding goes beyond your lender’s approved amount.

Buying at auction can be fast-paced and rewarding — with the right preparation, you’ll be in a strong position to secure the deal and make a sound investment.

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Want to learn more or explore your mortgage options?
Get in touch with our auction finance partner, Together, to see how we can help make your auction property dreams a reality.

• Author: Lloyd Marsden
• Categories: Buying at Auction