Auction and Mortgage Approval

E

elcaro

Registered User
Messages
13
Hi,

We wish to bid in a house auction.
We are in good order - with:

  • Mortgage loan approval (sanction in principle) for more than we will need (or are willing to spend)
  • Sufficient deposit on standby (>10%)
  • Title inspected by our solicitor
  • Engineering report
However - we are confused on the loan.

The auctioneer seems to want mortgage approval for the specific property in advance of the auction.
The bank (AIB) says they don't provide full approval until after sale agreed (i.e. when a final price is agreed).
Who is right?


If it exists - please point me to a thread that covers this already.
Thanks
 
Thanks Brendan,

Yes - "Your lender must have approved you for a mortgage for that particular property"

However, my bank contests this and argues that how can they approve prior to a price been agreed.
This must be a common enough situation.
 
Let's look at it another way, what happens after an auction, which you're now contractually bound to, and your solicitor discovers something not quite right with the title, something that the bank will not accept as title, and they then refuse you a loan based on that.
 
I am quite certain that your bank could issue with loan approval on the particular property subject to certain things such as the title being in order and a valuation report because they will be including as a matter of course that Mortgage protection will be required and the house be insured against Fire. The mortgage protection and fire insurance are dealt with after the purchase and not before.
This type of approval can be turned around within 48 hours I would imagine.
 
Over the last few years the process of mortgage approval has changed quite a bit. Approval in principal seems to be pretty much dead at this point.

BOI for example need a specific property when applying. They say this can be changed easily lately. The process is to go through the full app, submit all the document and get initial approval. I had heard AIB were the same although I'm sure someone else can confirm.
This approval can normally be used at auction, even if the address doesn't match.

There is always further checks afterwards when the drawdown stage comes along. Its not too uncommon anymore to hear of people being unable to complete after the auction, I know of at least one from the Allsop auctions. I believe you forfeit the booking deposit if the problem is on your side, you get it back if its on their side.
 
elcaro said:
The auctioneer seems to want mortgage approval for the specific property in advance of the auction.
Click to expand...

I hope you don't intend to give the auctioneer anything which would say how much you have been approved for? I fear the temptation to accept wall bids might be too much to resist.
 
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