Auction Finance
Auction finance as the name suggests is used to purchase a property at auction. Traditional mortgages can take a long time to complete however auction loans can be comfortably processed in the 28-day completion timescale that is required when buying a property at auction.
Property auction finance
Auction finance is a type of bridging loan that is specifically tailored for people who are buying property at auction. One of its key features is that it is very quick to arrange, usually even faster than regular bridging finance agreements.
When buying property at auction in the UK, successful bidders typically need to have 10% of the purchase price ready to hand over once the auction has ended. Full payment is usually due within 28 days, and auction finance is well placed to meet these deadlines.
Auction finance is only offered on a short-term, interest-only basis. It’s possible to get your funds within 14 days of application, provided you have at enough deposit (or another property/asset as security).
To repay the loan, you will either need to raise funds through your usual business activities, raise significant capital through another source (i.e. a buyout, acquisition or raising debt), or you will need to arrange to refinance the loan at end of its term.
Auction Loan Example
A property developer bids and wins at auction a property valued at £200,000. The developer is required to pay a deposit to the auction house immediately. This is usually 10% of the sale price, which will be £20,000 in this case.
The balance (90%) will then need to be settled within 28 days. Assuming the developer has already approached us for a pre-approval, we will fund the remaining £180,000 with a specialist auction loan within a matter of days. The property purchase is complete and the developer plans to renovate and sell it
The developer sells the property within 12 months, the auction finance is repaid at the point of sale.
Auction FiNANCE for every business
- Retail units / shops
- Properties in a state of disrepair/un-mortgageable
- Purchasing a buy-to-let investment property
- Houses in multiple Occupation
- Vacant properties
- Refurbishing owned properties to increase the yield
Key Features
The first stage is to identify what type of property you are going to buy. Look at the auction catalogue and chose a target property or properties. Consider how much work needs doing to the property. Look at the general area; What are the selling prices and values of comparable properties in and around that area? Finally ask yourself the question is the property good value, and can it generate a profit?
Auction Finance is based on the value of the property and there is less emphasis on the buyers income or credit status. Bad and poor credit scores are accepted.
The next step is pre-approval. This is an initial approval process which will require, identification checks and a quick on-line assessment of the property. The purpose of this is to give you the confidence that finance is available, and what amount of finance is available.
Finally, when you have your pre-approval, you can go to the auction and start bidding. If successful, you will need to pay 10% of the purchase price there and thereafter you will then be given up to 28 days to complete the purchase through your solicitor.
Rates from 0.90%
24 month loans
No credit scoring
Loans from £50,000
Decision in 72 hours
Up to 70% Loan to value
Get in touch via phone, chat or email about your query, however complex it might be. We will try our best to say yes to you, instead of finding a reason to say no.