Properties that have been repossessed by mortgage lenders offer the shrewd investor an excellent opportunity to turn a profit. According to the website, Money Saving Expert, repossessed properties are 10-30% cheaper than purchasing property that is sold conventionally. The reason for this is that the bank is primarily trying to recoup the money it has lent to the previous owner. If the owner has 25% equity in a £100,000 property, which is then repossessed, the bank is primarily concerned with recouping its £75,000.

However, the lender must be fair to the previous owner and make efforts to achieve the best possible price without unreasonable delay. This means that lenders must advertise the property as widely as possible. It also means that if they accept an offer they must continue to advertise the property for sale until contracts have been exchanged. Research by the ratings agency Fitch demonstrated that 87% of homes repossessed since 2007 were sold for less than the outstanding mortgage. If you are looking to purchase a property and are able to move quickly, buying a repossession is the best way to snag yourself a bargain.

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