I want to buy a property at auction and rent it out. Is there a specific mortgage product for this situation?
You can achieve this with a buy to let mortgage but will need at least 25% deposit.
the problems (potentially) will be timing related. its highly unlikely to get a lender ready to complete within an auction completion deadline as they are all very slow at the moment.
the only way to overcome this is to apply for the mortgage, get them to survey the property and confirm the max mortgage they will allow on the property which will be based on a combination of the market value and requiring the rental income to cover 125% the monthly mortgage.
the downside with all this is that if you dont win the auction you will lost all the money spent thus far with the lender.
the situation wouldnt change that much if you took auction finance and then wanted to convert to buy to let later but this will cost a lot as you will essentially double many of your costs and still have the lender % issues as described above.
its never been as easy as you are lead to believe on "homes under the hammer" ! | 12.14.10 @ 22:03