Buying A Repossessed House From The Bank
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Buying A Repossessed House From The Bank
A repossessed home is one the lender typically takes back from the property owner through the foreclosure process or by making an agreement with the borrower to sell. Banks, saving and loans, private lenders and government agencies fund home mortgage loans. All have house repossessions available for purchase. Buying a repossessed house involves more effort than a simple home sale. Bargain prices, however, justify the research and extra effort needed to buy the repossession.
Note: An appraisal, which tries to estimate true home value, is different from a home inspection, which tries to take inventory of current and potential issues. An appraisal will help you decide whether or not the asking price is fair; an inspection will help you understand the repairs and renovations needed, which is critical for a bank-owned home.
However, should the house not sell for the expected price,or if the mortgage lender really does want to achieve a quick sale to clear thedebt, then the lender will move the property from the agent and switch insteadto selling it at auction.
Oftentimes this equates to a cheaper price tag, think up to 30% cheaper. But what does opting to buy a repossessed house mean for a mortgage How does the process differ from buying a traditional property and what other types of financing are available This guide answers all of these questions and much more.
Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
Some potential homebuyers pass over foreclosures or buying a bank-owned home entirely because they are daunted by the special considerations that go into this kind of sale. Others might consider the same properties as slam-dunk bargains.
Whether you buy a repossessed house or flat and make the purchase through an estate agent or at an auction, you can save yourself thousands of pounds and get your hands on the keys in a short period of time.
Lenders typically sell repossessed properties through either an estate agent or at auction. As lenders want to recoup their losses as quickly as possible, they'll be looking for a fast sale which is why many choose to sell repossessed properties at auction. A property sale at auction can complete in less than a month. However, buying a property at auction is very different from buying a repossessed house through an estate agent.
Buying a repossessed property at auction can be a fast and effective way of getting a great deal on a property. Properties put up for auction are generally advertised for around a month before the sale, so you have time to view the property and arrange the necessary finance. You may also use this time to learn more about the property in question. Some people use a bridging loan to fund the purchase of a repossessed house at auction as this is much quicker to organise than a traditional mortgage. They then remortgage the property onto a normal mortgage and paying off the bridging loan once the property is secured.
Getting a mortgage on a repossessed property shouldn't be any harder than getting a mortgage on a standard property. The only significant difference that could make matters slightly more complicated will be if you require bridging finance in order to secure the property quickly (such as at auction). The fact that the house was repossessed previously shouldn't affect your ability to get approved for a mortgage. Mortgage applications are primarily assessed on a borrower's ability to afford the repayments, considered in combination with the size of the deposit they can put down and their credit rating.
If you require bridging finance or simply want more guidance on buying a repossessed property, contact our team at John Charcol. As an independent