Property Auction Finance

When bidding and then buying a property at auction, you must be confident that you can obtain all the funds required to purchase outright in a very tight time frame of normally 28 days from successful bid. A successful auction bid can be a legally binding transaction similar to the exchange of contracts in standard property transactions. This makes it extremely important that the timescale is achieved otherwise strict financial penalties could be imposed on the bidder.

With a successful auction bid, you are usually obliged to pay the equivalent of 10% of the purchase price as a deposit, which can be confiscated if the remaining funds are not available as planned. Obtaining a mortgage in the needed time frame is frequently impossible, therefore unless the bidder has funds ready; a bridging loan may be the best alternative. A bridging loan is a short-term loan that can be used to acquire an auction property and is normally returned when the property is sold or refinanced onto more traditional financing, such as a mortgage.

Don’t miss out on an auction due to financial issues

The beauty of bridging finance is that it can be arranged quickly and is more flexible than a mortgage. Lending decisions on bridging loans for an auction property are often made within hours of the initial enquiry and the required funds are made available within a matter of days. This allows the borrower to complete the auction property purchase within the 28-day time frame typically required by the auction company.

Bridge finance can also be used to pay the 10% deposit if required by the bidder. The loan company would need to agree to this prior to the auction date, but provided this is acceptable, the 10% is normally secured against another property owned by the bidder or another person associated with the bidder.

It can even be arranged so that the bidder receives 100% or more of the purchase price so that renovation funds, fees, etc. are covered. As before, other properties will be required for security to enable this.

In order to get the best possible advice on bridging finance, please complete our short application form, and we can get a specialist bridging loans expert to get in contact with you. We are likely to source the best bridging loan rates in the UK.