Month: January 2024

Buying properties is a fast paced environment where you cannot afford to waste valuable time, that’s where auction finance, a type of bridging loan, comes in. Opportunities often arise at unexpected times, requiring fast decisive action. 

Those eager to capitalise on these opportunities can avail of auction bridging finance, it can open doors that might otherwise remain closed without fast cash. This guide will delve into the world of auction finance UK, shedding light on how you can secure funding to get the upper hand at the next auction. 

Understanding Auction Finance in the UK

A specialised form of short-term lending is property auction finance; it is tailored to accelerate the acquisition of properties at auctions. 

This specialised type of financial aid is geared towards providing individuals with speed and flexibility that is required to navigate the fast-paced nature of property auctions.

How Does Auction Finance Work?

Auction finance operates by offering individuals a short-term loan to cover the purchase of a property at auction, this form of financing is designed to be agile, ensuring that potential buyers can act swiftly and secure the property they desire without being hindered by traditional lending processes. 

Auction finance operates on a short term interest only basis, boasting rapid access to funds. Auction finance is feasible if a sufficient deposit or asset as collateral is in place and a well-documented exit strategy is evident.

The exit strategy outlines how you intend to settle the debt with the terms that are in place. In scenarios involving property or land, the typical exit strategy involves either a remortgage or the sale of the asset. Property auction finance lenders prefer tangible proof of the asset’s marketability or an agreement in principle to demonstrate a viable exit strategy.

Property auction finances come with considerably shorter term lengths than mortgages. Repayment periods typically range, although some lenders may agree to extending.

How Much Deposit Will You Need?

When diving into the realm of auction property finance, it’s crucial to understand the deposit requirements. Typically, auction finance requires 10% of the property’s purchase price as a deposit. 

Auction finance deposit amounts may vary depending on price or lender, but having a clear understanding of your financial commitments upfront is essential in securing the funding you need.

Types of Property You Can Buy

One of the key advantages of auction finance is its versatility in accommodating various types of properties, below we have listed the types of properties you can acquire with the help of auction finance:

• Commercial
• Residential
• Land
• Agricultural property
• HMO’s
• Un-mortgageable properties

Buying a Property at Auction in the UK

Understanding the auction process, legal responsibilities and the challenges that may come with certain properties is key to a successful venture in the market. Help from auction finance in the UK will allow you to confidently participate in auctions; below is a step by step guide of things to help you seize the opportunity:

• Preparation and research
• Financial planning
• Attend auction previews
• Legal due diligence
• Register as a bidder and stay on budget
• If successful expect to pay around 10% of purchase price
• Post auction work closely with auction finance lenders to pay back loans

How to Apply and Get the Best Auction Finance Deal

Applying for auction finance involves a strategic approach, to get the best auction finance deal it is essential to work with experienced lenders who understand the auction property finance landscape. 

Begin by researching reputable lenders, compare terms and tailor your application to showcase your ability to capitalise on opportunities whilst successfully repaying loans.

Before you Go..

By understanding the mechanics of auction finance you can position yourself to make informed decisions. When applying for bridging finance, prioritise reputable lenders to ensure you secure the best bridging loan deal that aligns with your goals. 

Having a well planned approach can be a catalyst for turning property aspirations into reality with the help of property auction finance, get in touch with us to find out how we can help.