In the July 2008 Issue of Property Investor News
A perspective buyer has received the latest auction catalogue a few weeks before the auction and thumbing through it, he/she sees a couple of properties of interest. What would be the correct route to go down to ensure that the properties they fancy can be purchased on the big day?
Is it mortgagable?
According to Geoff Philpot of DMI Finance, a buyers first point of call should be to contact his/her solicitor to examine the legal documents of the properties that have caught their eye prior to organising finance. Philpot says: "It is imperative to make sure that the property is actually mortgagable. For example, if the property is in the West Midlands there is a possibility that it is in an area of mining activity and so a mining report will need to be done. If a buyer doesnt do this and then realises that this is the case post-auction, once they have laid down a deposit, it is highly unlikely that they will get a mortgage and so lose his/her deposit."
Other reasons why the property would be unmortgagable is if it is structurally unsound. Andre Bartlett of Savills Private Finance says: "A structure report will have to be carried out and if, for example, Â£20,000 of work is needed, no financier will lend on it. If it is a mortgagable property, they will look at its condition and this will play a part in how much they will lend."
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