A mortgagee sale is a sale by a lender that has taken possession of a property after the borrower defaulted. The lender must take reasonable care to get market value, so these homes are rarely bargains, but the contracts often give buyers fewer warranties and less flexibility. Most are sold at auction, so buying one means no cooling-off and finance arranged before you bid.

Mortgagee sales at a glance
Feature What it means for a buyer
Seller The lender, not the owner
Price Lender must seek market value; discounts are not guaranteed
Contract Often sold as is, with limited warranties
Method Commonly auction: no cooling-off
Finance Normal home loan, valued as is

Why aren’t mortgagee sales cheap?

The lender selling a property has duties to the former owner, including taking reasonable care to obtain market value. It will usually have the home valued and marketed properly. Prices can be lower when the home needs work or the market is quiet, but there is no automatic discount.

How are the contracts different?

  • Sold as is, with few promises about condition, inclusions or approvals.
  • Limited information, because the lender never lived there.
  • Special conditions protecting the seller, for example on the timing of vacant possession or exclusions for missing keys and manuals.
  • Firm settlement dates, with little room to extend.

Have a solicitor or conveyancer read the special conditions before you bid.

How do you finance a mortgagee sale?

With an ordinary home loan, but plan it as you would for an auction. Get a fully assessed pre-approval, ask your broker whether the property type suits your lender, and allow for a valuation that reflects the home’s condition. If the home needs significant work, a renovation loan or extra savings may be needed; see renovation loans. The pre-approval before auction article covers bidding with finance in place.

What should you inspect?

  1. A building and pest inspection, as homes can be neglected.
  2. Any unapproved work, which the seller will not warrant.
  3. Services: power, water and hot water may have been disconnected.
  4. Strata records, for units: levies may be unpaid by the former owner, and the contract should deal with them.

Is it a first home opportunity?

It can be, if the property suits your loan and budget. First home buyer duty relief and the 5% Deposit Scheme work the same way as for any purchase, as long as the price and value are within the caps. Bidding at auction means no cooling-off, so be sure of your limit; the buying position calculator helps set it.

Questions people ask

Are mortgagee sales cheaper?

Not necessarily. The lender must take reasonable care to obtain market value, so expect fair prices, with discounts mainly for condition.

Can I get a home loan for a mortgagee in possession property?

Yes, a normal loan. The valuation reflects the condition, and auction rules mean finance must be arranged before you bid.

Is there a cooling-off period on a mortgagee sale?

Not if it is sold at auction. A private sale has the usual 5 business days unless waived.

How do you find mortgagee in possession properties?

They are listed by real estate agents like any other sale, usually marked as a mortgagee sale or mortgagee in possession, and most go to auction. Searching listings for those words is the simplest way to find them.

Charles Touma checks the finance on a mortgagee sale before auction day, including how the condition may affect the valuation. A free 30-minute call covers it. General information only, not legal or credit advice; a NSW solicitor or conveyancer should review your contract.

Sources: NSW Government, buying at auction; NSW Government, inspecting a property; NSW Government, contracts, deposits and cooling-off, checked 18 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.