Category: Real Estate

  • Top 6 Pros and Cons to Consider Before Buying a Property At Auction /

    Top 6 Pros and Cons to Consider Before Buying a Property At Auction /

    The Pros and Cons of Buying a Property At Auction

    Buying a property at auction is gaining a lot of popularity, not only among property developers and investors, but homeowners as well. In fact, around 40% more property of value was sold at auction in 2022, compared to 2019. The speed of the process, the convenience and a chance of getting a bargain – it’s clear to see why. Auctions are a great way to grab excellent property deals, but one should be aware of all the risks that are associated with it.

    Real estate auction involves the public sale of property that may have gone through mortgage foreclosure, have unpaid homeowner association fees, have unpaid property taxes or estate sales. That means there are good chances of finding a property that is in good shape and have more amenities than you would otherwise be able to afford.

    Auctions are either conducted online or in person. So, if you have decided to buy a property at auction, it is important to weigh its pros and cons, so you can figure out whether or not purchasing a home at auction is a good idea for you.

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    3 Pros of Buying a Property at Auction

    #1 Most likely to find a bargain

    Perhaps, the biggest benefit of buying a home at auction is you can buy it at a considerable lesser price than you would through traditional real estate buying process. That is because auction firms take only those properties that are discontinued for any reason and are priced attractively. Usually, you can expect 10 to 20% lower than the actual price. That means, you as a buyer have the opportunity to grab a great bargain.

    Theoretically, auction lets you purchase a property for as low as the amount owed to a mortgage lender, tax authority or the HOA, which might be only a few thousand pounds of a home worth few hundred thousand pounds. Once you make sure that the property is suitable for you, then the chance of getting a bargain at auction is real. However, note that not every property that is listed at auction is a bargain. So, figure out what maximum price you are willing to pay and stick to it.

    #2 Fastest way to buy a property

    When you purchase a property through a real estate agent, there are no deadlines to meet, so things can just delay indefinitely. That is because all the due diligence is carried out after you agree on a price with the seller. Moreover, in between the process if the seller finds a better buyer, they may sell the property even without informing you.

    On the contrary, real estate auction is the fastest way to purchase a home. In this process, the due diligence is done before the auction day. Moreover, as soon as you win the bid, you pay 10% of the bid amount, sign some documents, and the home is yours. The rest of the amount needs to be paid within 28 days. Meaning, you will not miss out on the purchase, and become a homeowner the very same day.

    #3 Seller cannot back out

    There is nothing worse than spending time and money on researching a property and finally agreeing to purchase just to realise that the seller backed out later. This is a common occurrence and could happen to anyone. House sales fall through because of many reasons, such as sellers getting a higher price than yours, they lost their onward purchase and decided to stay put, or they simply changed their mind.

    With auctions, there are no such risks. As soon as the hammer slams, it creates a legal contract between you and the seller. Neither you nor the seller can back out for any reason. Therefore, it is essential to be mindful while placing the bids.

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    3 Cons of Buying a Property at Auction

    #1 You need your finances ready

    As soon as you win the bid, you will be required to pay the 10% deposit amount there and then, and the remaining amount within 28 days. This isn’t enough time to arrange a huge amount of money unless you plan on taking bridging loans UK, which is the only feasible way to raise funds. In addition, you also need to make sure that you don’t miss out on the payment otherwise you will be charged with heavy penalties.

    That means before you reach on the auction day, you must have the proper finances in place. There are specialist bridging finance quote providers that help you arrange funds as quickly as within a few days, so you can complete the auction property purchase before the deadline and avoid any penalties.

    #2 It is easy to get tempted and bid over budget

    Going over budget is the biggest risk for potential buyers. As the bid value goes up, it is easy to think ‘what’s another £1000 would make a difference?’ It is easy to get carried away and bid much more than you could actually afford.

    Therefore, before you enter the auction room, be prepared with how much you are willing to bid and stick to it. Small increments sum up to a large amount and you could easily find yourself in stressful financial condition if you don’t stay mindful about your bids. Remember that once the hammer slams down, there is no going back. Thus, the auction is not right for you if you are not disciplined about your budget.

    #3 You may not actually know about the property’s condition

    Buying a property at auction is riskier than you think. Property auction often involves defective properties with improper covenants, structural damages, short leases and other issues. The properties are sold ‘as-is-where-is’. Furthermore, you may not get adequate time to conduct surveys and check legal documents of the property.

    Often sellers disclose only those problems that are visible to the naked eye, while leaving other problems for you to discover yourself. If you miss finding out any repairs or leaks, you may need to spend extra money to fix them. This way you will lose the added cost advantage of buying a property at a lesser than market value price.

    Conclusion

    If you keep these pros and cons in mind, you can successfully buy a property at auction. But, the situation can really turn upside down if you fail to understand them. Therefore, before you participate in the property auction, make sure you decide your budget, familiarise yourself with the bidding process and formalities, and physically examine the property for any problems. If you do your research well and follow the best practices, you can grab a great deal and purchase the property way faster than the traditional process.

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  • What Are Buy-to-Let Mortgages? A Short Guide To Understanding Mortgages.

    What Are Buy-to-Let Mortgages? A Short Guide To Understanding Mortgages.

    We all want a home of our own. In Europe renting a house is very common and most don´t want to buy a house – 15 years ago. But in Britain, homeownership became a dream for most people. We have heard about these loans with different names, but the one we were looking for was a buy-to-let mortgage. So what is a buy-to-let mortgage?

    A buy-to-let mortgage allows you to borrow money to buy a property with the intention of renting it out. They can be used for a wide range of properties, from residential flats to purpose-built letting property, as long as you have permission from the landlord or tenant managing agent. There are many reasons why people choose to buy a property that they will rent out, the obvious advantage is that you can make a profit where traditionally there would be none.

    Getting your first mortgage is an exciting step in your life. However, when you start researching, you may find yourself confused about the terms “buy-to-let” and “investment” mortgages. You may even think these are two words for the same type of mortgage. This is common because most UK lenders use the term “buy-to-let” incorrectly to describe investment mortgages, especially when describing different types of mortgages themselves.

    A buy-to-let mortgage is a type of mortgage that is designed for investors who wish to purchase and rent out properties with the intention of making a profit.  Most mortgages can be split into two distinct camps:  those that are designed to help you purchase a property and the property to live in it (known as ‘residential mortgages’), and those that are designed for investors, who own more than one property. These are known as ‘buy-to-let’ mortgages.

    A buy-to-let mortgage is a mortgage specifically designed for landlords to buy residential property to let out. It is similar to a standard mortgage except that it often features a higher loan-to-value ratio, meaning the amount borrowed is higher than the value of the property being purchased. This is because landlords are seen as being more creditworthy than many other potential borrowers because they have an asset which they can sell if their business fails

    There are some benefits of Buy-to-Let Mortgages. This is a type of mortgage that has been designed for those who wish to make some money by renting out a property that they have purchased. The main benefit of a Buy-to-Let Mortgage is that it allows you to buy a property with a deposit as low as 5%. This means that you will have to pay less money upfront and start making money from your initial investment much faster

    There are a number of benefits associated with buy to let mortgages and one of the most obvious ones is that you can make a return on the property. Another benefit is that if you have been looking to move up the housing ladder, but have been unable to achieve this due to financial constraints, then a buy-to-let mortgage could help you achieve your goal.

    Weybridge Mortgage Broker and Adviser is a leading UK mortgage broker based in Weybridge. The company has been offering professional services to individuals looking for a mortgage or remortgage. The firm provides mortgages of all kinds, including residential, second charge, buy-to-let, equity release and bridging finance. Weybridge Mortgage Broker and Adviser also offer financial advice on matters related to mortgages.

  • How to Refinance a British Property

    How to Refinance a British Property

    The coronavirus pandemic has caused a lot of uncertainty and panic in the housing market with more people now seeking better savings opportunity from lenders. 

    While the traditional average mortgage term is about 25 years, many people are now seeking an extension of 30 years and above, especially first-time buyers. But depending on the kind of mortgage you’re eligible for, refinancing your property might offer you some benefits including getting a lower interest rate, having a shorter payoff term and a lower monthly payment. 

    However, the most immediate benefit of refinancing your property in the UK is that it helps borrowers who are in dire need of money, free up some space on their monthly budget for other expenses. This is particularly useful for those whose cost of living may have increased due to either taking on newer responsibilities or losing their jobs due to the impact of the COVID-19 crisis. 

    There are several ways to refinance a mortgage, one of which is raising more money by remortgaging. With average home prices increasing in the many regions in the UK within the past decade, homeowners are looking to make more money off the capital growth they have enjoyed over time. A borrower who has £200,000 left on their current mortgage might want to remortgage their property for £250,000, which would give them an extra £50,000 to spend on something more important to them. 

    Also, determining how much equity you have on your home can help when refinancing your property. You can even make a loan overpayment by paying extra money above the agreed monthly sum to improve your home equity, clear your debt faster and reduce the accumulated interest throughout the loan period. For example, if you still owe your current lender £200,000 on your property and it is now worth £500,000, it means you automatically have a £300,000 home equity. 

    If you are an expatriate and no longer living in the UK, remortgaging your property is essential once your fixed or discounted interest rates expire. Remortgaging the property would help raise more money that can be channelled towards other purposes such as paying a deposit for another property, consolidating your debt and making some home renovations.