Due to the short timescale process of buying a property at an auction, long-term financing options such as mortgages are impossible to place into action quick enough to buy a property.
However, there are some other options to finance your purchase, and one of them is a short-term bridging loan for an auction property.
At an auction, you are required to pay a non-refundable deposit immediately, that’s generally around 10 percent. Completion of this transaction won’t happen until 28 days later.
Within this period, you can easily arrange an auction bridging loan. Bridging loans for auctions are available for residential properties as well as commercial.
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What are Bridging Loans and how do they work?
Why Go For Auction Bridging Loans?
There are several genuine reasons to go with auction bridging loans, so let’s discuss them:
- They can be pre-agreed, which means that you can expect a contract in principle with your bridging lender quickly. And when the bid is accomplished at an auction, you would be able to move it quickly to the next phase.
- They aren’t always based on credit or income. Unlike mortgages, the lender will not ask for your employment history or any business plan depending on the exit strategy, making them that much faster than any other loan.
- They are available between two weeks and eighteen months.
- You can generally borrow up to 80 percent Loan to Value of the property, which means the loan size in comparison to the property value. Keep in mind; if you were to utilise another property or asset as collateral that has equity, you might be able to borrow more or obtain lower rates or even both, which could entail you borrowing up to 100% of the cost.
Buying a house with a bridging loan
Reasons To Consider An Auction Finance Specialist
Working with an auction finance specialist to get bridging loans for auction properties can add a lot to your plate, so let’s discuss the perks of using an auction finance specialist:
- Personal service: You will work with a professional and experienced case manager to manage your needs from initial inquiry to completion.
- Fast Decisions: When you work with an auction finance expert, you will get a complete guide in principle the same day as getting your inquiry. Moreover, the lenders will offer full, comprehensive terms for the specific loan.
- Customised to you: Each loan is processed on its individual merits and can be customised for your unique requirements. Working with an auction finance specialist lender would help you meet your requirements even in today’s competitive market.
- Fast Turnaround: Funds can usually be made accessible within 7 to 10 days, thus with a supportive solicitor, you can expect the whole process completed within a week of your first inquiry.
- Flexible: Loans can be arranged after, during, or before the auction, which means that you get the flexibility to manage your finances when you choose, and valuations can be completed after a successful bid at auction.
To calculate costs on a bridging loan
Even though it’s flexible with bridging loans for an auction property, it’s recommended to get the valuation of the property and finance agreed before you attend the auction.
Why not discuss your auction requirements with Property Finance Partners. We are experts in property finance including finance for auctions.
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Why Choose Property Finance Partners?
- Offer some of the lowest rates in the UK
- Offer first and second charge bridging loans at the lowest rates
- Borrow up to 80% Loan to Value
- Borrow from £20,000 to £1B and above (keeping currency units the same)
- Many structured finance facilities available
- Ability to finance up to 100% of the loan to cost for developers
- Finally a personal customer experience
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