Getting a BTL mortgage after paying cash at auction

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    Getting a BTL mortgage after paying cash at auction

    Hi all,

    I have cash which I intend to use to buy a property at auction.

    My question is, when I come to get a BTL mortgage to release some of the equity. Will this be valued at what I paid at auction or is it possible to revalue higher and therefore release more equity?

    #2
    Yes you can. There will be a small number of specialist lenders that do this. They will do their own valuation..

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      #3
      Thanks David.

      Do you have lenders in mind or should I use a broker?

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        #4
        I believe (but not 100% sure) If you buy it with cash then do a renovation, then get tenants you will have access to a wider spread of BTL lenders.

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          #5
          If you are seeking a release of equity most lenders will require you to have owned the property for a minimum of 6 months or if earlier the price as paid at auction. if As has already been indicated you buy and refurbish and keep all accounts of expenditure there is a significant number of lender who will lend against the enhanced capital value up to what is now the norm of 70/75%, in the short term no one can predict what a property is really worth at auction or by private treaty so there is a real potential that the anticipated increase in value might not reflect your expectations so if you aren’t in a rush allow a reasonable period of time so you can monitor prices achieve at auction and sold on the open market.

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            #6
            this was essentially my start up business model with an inherited 50k, bought a house for 37k, after refurb it was worth 85k, btl remortgage to take out 75% equity and purchase the next house with that, after refurb release that equity etc etc.

            You do have to wait 6 months but the value of the house is the value the mortgage company deems it to be at remortgage time. The price paid ar auction 6 months earlier is irrelevant. The only hurdle is waiting 6 months.



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              #7
              Hi Daz,

              And were you successful with this? It's pretty much the idea that I had. I was just a bit unsure as to how easy it was to re-finance and release equity at a higher price.

              I appreciate everything is a bit skewed because of the pandemic, but did it work well in normal market conditions?

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                #8
                I had the luck of a market tailwind behind me so house prices were rising throughout 2012 onwards, and i did 90% of the work myself, along with extensive research on being a landlord.

                It has paid off nicely though. I think by offering pre auction offers worked well for me, avoiding the frenzy of auction day. Leeds was also until the pandemic, booming in both rental prices and property prices.

                The finance part is the easy bit, i have a good broker which is essential for smooth applications.

                How covid will affect things i dunno. I have refinanced recently on one to take advantage of a potential drop in the market. Wether it is as fruitful as the last recession remains to be seen.

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