Struggling to Get on the Property Ladder? You're Not Alone.
If you’re a first time buyer, the dream of owning your own home can sometimes feel more like a nightmare. With house prices rocketing and mortgage lenders tightening their belts, scraping together a deposit that meets their criteria can seem impossible. You might even find yourself staring at your savings, wondering how on earth you’ll ever make that jump. Trust me, you’re not alone—many of us have been there.
But here’s the thing: while the traditional housing market might be a tough nut to crack, there’s another route that often gets overlooked—buying at auction. It’s not just for seasoned investors; it’s for people like you and me, looking to get our foot in the door, literally.
Why consider buying at auction?
Imagine this: you’ve spent months trawling through property listings, only to find that every home in your price range needs more work than you can afford, or worse, it’s snatched up before you even have a chance to view it. Frustrating, right? That’s where auctions come in.
Buying at auction can be a game changer, especially for first-time buyers. It’s fast, it’s straightforward, and best of all, it can be a way to nab a property at a lower price than you’d expect. There’s something thrilling about the auction room—the quick pace, the excitement, and yes, even the nerves. But don’t worry; it’s all part of the experience.
The big day: what to expect at an auction
Let’s talk about auction day. Picture this: you’ve done your homework, sorted your finances, and you’re sitting in the auction room (or maybe online), heart pounding as the bidding starts. It’s easy to get caught up in the excitement, but here’s a tip—set your maximum bid and stick to it. The last thing you want is to win the bid, only to realise you’ve overextended yourself.
A friend of mine once told me about his first auction experience. He had his eye on this fixer-upper and was determined to get it. When the bidding started, he could feel his palms sweating. He stuck to his plan, though, and when the hammer came down, he’d won his first home—at a price he could afford. He swears that was the best decision he ever made.
Beyond the bid: the real costs of homeownership
Let’s get real for a moment—buying a home isn’t just about winning the bid. There are other costs that you need to factor in, and it’s easy to overlook them when you’re caught up in the excitement.
For starters, there are mortgage arrangement fees. These can add up quickly, especially if you’re going for the best rates. And then there are the everyday costs of running a home—things like buildings insurance, utilities, and council tax. They might not sound like much individually, but trust me, they add up.
It’s a bit like when you first move out of your parents’ house and suddenly realise just how expensive loo roll and toothpaste are when you’re buying them yourself. Owning a home is the same, just on a bigger scale.
Is renting really any better?
Now, you might be thinking, “Why bother? Maybe renting isn’t so bad.” But here’s the thing: renting often costs as much, if not more, than a monthly mortgage repayment. And at the end of the day, you’re paying off someone else’s mortgage, not your own.
Buying your own place means that every payment is going towards something tangible—your home. Plus, there’s the freedom that comes with owning. Want to paint the walls bright yellow? Go for it. Want to knock through that wall to create an open-plan kitchen? The choice is yours.
Your questions, answered
I get it—buying at auction can be a bit intimidating, especially if it’s your first time. That’s why we’ve put together a list of FAQs to help clear things up. Whether you’re wondering what happens if the property needs repairs, or how to finance an auction purchase, we’ve got you covered.
Can First-Time Buyers Buy Property at Auction?
Yes. Property auctions are open to first-time buyers as well as investors, landlords and developers. While buying at auction differs from purchasing through an estate agent, many first-time buyers successfully purchase their first property at auction each year.
The key is to carry out thorough research, arrange your finances before bidding, review the legal pack and understand the auction terms and conditions. With the right preparation, auctions can provide access to a wide range of properties, including homes, renovation projects and investment opportunities.
If you're new to auctions, it's advisable to attend a few auctions, either in person or online, before bidding so you can familiarise yourself with the process.
Can I get a mortgage on an auction property?
Yes, many auction properties can be purchased using a mortgage. However, it is important to arrange your finance before bidding and ensure your lender can meet the auction completion deadline, which is often 28 days.
Some auction properties may be unsuitable for mortgage lending due to factors such as their condition, construction type, short lease, legal issues, or lack of basic facilities. In these cases, buyers may need to use cash, bridging finance, or specialist lending products.
Before bidding, always review the legal pack, inspect the property where possible, and speak to your lender or mortgage broker to confirm that the property is likely to be mortgageable.
If you are relying on a mortgage, having an Agreement in Principle in place before the auction can help you understand your budget and avoid disappointment.
Q: What's the difference between a Cash Buyer and a Mortgage Buyer?
A cash buyer is someone who has immediate access to the funds needed to purchase a property without relying on a mortgage or other property-related finance. This could be money held in savings, investments, or funds released from a previous property sale.
A mortgage buyer, on the other hand, requires a lender to provide some or all of the purchase funds. Mortgage applications involve valuations, affordability checks and legal processes, which can take time to complete.
When buying at auction, both cash buyers and mortgage buyers can bid on many properties. However, auction purchases usually require completion within a fixed period, often 28 days, so it is important that any finance is arranged as early as possible.
Some auction properties are advertised as "cash buyers only". This typically means the property may be difficult to mortgage due to factors such as its condition, construction type, legal issues, short lease, or lack of essential facilities. In these cases, buyers may need to use cash, bridging finance, or specialist lending products.
If you plan to buy at auction using a mortgage, it is advisable to speak to a lender or mortgage broker before bidding and ensure you understand the timescales involved.
Q: Why is the guide price so low?
The guide price is not necessarily the amount a property will sell for. It is simply an indication of the seller's minimum expectation and is used to generate interest ahead of the auction.
Auction properties often attract competitive bidding, particularly if they are in a desirable location or offer development, investment or refurbishment potential. As a result, many properties sell for significantly more than their guide price.
Guide prices may also be set lower to encourage a wider audience of potential buyers and create competitive bidding on auction day.
If you're interested in a property, it's important to carry out your own research, arrange a viewing where possible, review the legal pack, and consider comparable local sales before deciding how much you are prepared to bid.
Remember, the guide price is only a guide — the final selling price may be higher or lower depending on market conditions and buyer demand.
Q: Why are some auction properties so cheap?
Auction properties can sometimes appear to be priced well below their market value, but there is usually a reason.
Some properties require significant refurbishment or repair, while others may have legal, structural or tenancy issues that make them unsuitable for a conventional sale. In other cases, the seller may simply be looking for a quick and certain sale rather than waiting for the right buyer on the open market.
Properties commonly sold at auction include renovation projects, probate properties, repossessions, investment properties, land, development opportunities and homes with unusual features or circumstances.
It's important not to assume that a low guide price represents a bargain. Before bidding, always carry out thorough research, arrange a viewing where possible, review the legal pack and consider any additional costs that may be involved.
Many auction properties attract strong interest and ultimately sell for considerably more than their guide price.
What happens if I win an auction and can't complete?
A successful auction bid is legally binding. Once the auction ends and you are declared the winning bidder, you are committed to purchasing the property under the terms and conditions of the auction.
If you fail to complete the purchase, you may lose your deposit and could be liable for additional costs, including legal fees, interest charges, remarketing expenses, and any loss incurred by the seller if the property is subsequently sold for a lower price.
For this reason, it is essential to arrange your finances, review the legal pack, and carry out all necessary due diligence before bidding.
If you are unsure whether you will be able to complete within the required timescale, it is advisable not to bid until you have received professional advice and confirmed your funding arrangements.
How much deposit do I need to buy a property at auction?
In most cases, you will be required to pay a deposit of 10% of the purchase price immediately after the auction if you are the successful bidder.
Depending on the auctioneer and the property, additional fees may also be payable, such as administration fees, buyer's premiums, or reservation fees. These costs will usually be detailed within the legal pack or auction conditions.
Before bidding, make sure you understand all associated costs and have sufficient funds available to pay the deposit and any fees required at the conclusion of the auction.
Auction terms can vary, so always check the specific conditions provided by the auctioneer for the property you are interested in.
What is Bridging Finance?
Bridging finance (or a bridging loan) is a short-term loan designed to help buyers complete a property purchase quickly, often before longer-term finance such as a mortgage can be arranged.
It is commonly used by auction buyers because auction purchases typically require completion within a fixed period, often 28 days. A bridging loan can provide fast access to funds, allowing the buyer to meet the completion deadline and secure the property.
Once any refurbishment works have been completed, planning permission obtained, or the property becomes suitable for mortgage lending, many buyers then refinance onto a standard mortgage and repay the bridging loan.
Bridging finance is often used for properties that may be difficult to mortgage initially, including renovation projects, properties in poor condition, non-standard construction homes, development opportunities, or lots requiring a quick purchase.
While bridging finance can be a useful tool, it is generally more expensive than a traditional mortgage. Buyers should always seek independent financial advice and ensure they fully understand the costs, terms and repayment strategy before proceeding.
If you're considering using bridging finance to purchase an auction property, it is advisable to speak to a specialist broker before bidding.
Ready to take the leap?
Look, buying your first home is a big deal, and it’s okay to feel a bit overwhelmed. But remember, it’s also an exciting time, full of possibilities. So why not explore what’s out there? Your first home could be just a bid away.
Buying your first home, however you do it, can be a daunting prospect, so check out our FAQ's and our Buying Guide to help you understand the processes involved when buying property at auction.
You might also find these blogs we've written pretty useful - worth a read if you want to gen up further.
Can I Get Auction Finance with Bad Credit?
Mortgage Options for First-Time Auction Buyers
Using Private Lenders for Auction Purchases
Benefits of Pre-Approved Auction Finance
Auction Finance Mistakes and How to Avoid Them
Can You Use a Standard Mortgage for Auction Purchases
How to Complete a Property Purchase After Winning at Auction
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Best of luck, all you first time folks!