buying at auction - mortgage

[LouisCribben]

If you purchase a buy to let property (or any propperty) at auction, you've normally got a limited period of time to settle (say 20 working days)

This may not be enough time to arrange a mortgage.

Should it be possible to expedite the transaction and pay for the property in cash (if someone had spare cash), and immediately afterwards arrange a mortgage on the property ?

I know someone in this position, they have the money to buy a property, but they don't want to invest all of their money in the property, as it effects their liquidity.

 

[Brendan Burgess]

The problem with this is that to get tax relief on the interest paid, the mortgage must be used to acquire the property.

If you mortgage a property which you own fully, you would not get tax relief.

Your friend should try to get the mortgage finance in place before the auction. He may be able to put his cash on deposit in the bank as security.

Brendan

 

[LouisCribben]

Great advice, what you said about the tax relief is obvious, although I hadn't considered it........... I didn't even think about the tax implications !

 

[oldnick]

Brendan -
If one borrows money from one person (even from oneself) to purchase a property- and then returns that loan (even to oneself) and gets a new loan for the same purpose are you saying that Revenue will not allow interest-relief ?

I've used cash to grab a place and then get the bank to take over -i.e. lend money on the property. And I claim interest on the loan as the purpose of the loan was to finance the purchase of the said property, regardless that temporarily I first borrowed money elsewhere (i.e. from myself).