FAQs

When it comes to purchasing a property at auction, sometimes traditional lending sources just won't cut it. That's where auction finance steps in, also known as auction property finance or an auction bridging loan.

This specialised form of financing is designed specifically for those who need a quick and flexible solution.

Unlike traditional high-street bank loans, auction finance offers fast turnarounds and a more lenient set of criteria. It fills the void for individuals who may be unable or unwilling to rely on traditional lending sources.

Auction finance is the go-to solution for purchasing property at auctions due to its quick setup time, typically within 3 to 14 days. It offers flexibility in terms of the loan amount, ranging from as low as £26k to a staggering £250m or more.

When participating in an auction, buyers are required to provide a deposit of 10% of the property price on the day of the auction, immediately after placing their winning bid.

To secure the purchase, buyers must complete the transaction within 28 days; otherwise, they risk losing both the property and their deposit.

Once the long-term mortgage is in place, buyers can utilise the funding to repay the auction bridging loan.

To secure the purchase, buyers must complete the transaction within 28 days; otherwise, they risk losing both the property and their deposit.

Once the long-term mortgage is in place, buyers can utilise the funding to repay the auction bridging loan.

Auction finance in the UK can be used to purchase a wide range of property types like:

• Un-inhabitable properties

• Un-mortgageable properties

• Repossessions

• Buy to lets

• Houses of Multiple Occupancy (HMO)

• Multi-Unit Freehold Blocks (MUFB) § Buying a property with a short lease

• Property flips

• Investment purchases

Auction finance opens up a world of possibilities when it comes to purchasing properties at auctions.

Not only can it be used to buy properties outright, but it can also fund any necessary refurbishments or renovations to increase the property's value before selling it.

• Residential Property

• Commercial Property

• Industrial Property

• Development Opportunities

The condition of a property plays a crucial role in determining its mortgageability. For a property to be deemed suitable for a mortgage, it must be structurally sound and in good condition.

This type of financing is specifically designed for properties that require significant repairs or renovations to make them habitable again.

When considering purchasing a property at auction, it is crucial to come prepared with your finances in order.

Instead of relying solely on cash, you have the option to utilize an auction finance loan, such as a bridging loan, which allows you to borrow the necessary capital beforehand.

Before placing a bid, you will need to provide proof that you have the funds available to cover the property's cost. This can be achieved by obtaining an 'in principle' auction finance loan, which guarantees that the funds will be accessible for the purchase.

Once approved, it is essential to be ready to access the funds within 28 days from the auction day.

Once you have successfully secured the winning bid and the money has been transferred to the seller, your repayment options will depend on the type of auction finance you have chosen.

When considering your eligibility for an auction finance loan, lenders take into account several important factors. These include

• The amount of cash you plan to invest in the purchase

• The level of security provided by the property

• The loan-to-value (LTV) ratio of the property

• As well as your credit history and score

By carefully assessing these elements, lenders can determine whether you meet the requirements for the loan.

When applying for a loan, it's important to provide the necessary personal information to ensure eligibility and suitability based on your financial situation.

This includes details about your income, employment status, credit history, and financial commitments.

When applying for a loan, it's important to provide the necessary personal information to ensure eligibility and suitability based on your financial situation.

This includes details about your income, employment status, credit history, and financial commitments.

Yes. Looking to secure a property in a jiffy?

Auction finance might just be the answer you're looking for! Unlike conventional mortgages, the process is lightning-fast and requires minimal paperwork.

You could have your loan approved and funds available in just a matter of days.

When it comes to auction finance, the amount you can borrow depends on a few key factors.

These include how much you need, the value of the property you're interested in, and the size of your deposit. Typically, lenders will want you to borrow at least 50-75% of the property's value.

Did you know that it's possible to borrow 100% of your auction purchase price?

However, to make this happen, you'll need to provide additional security over other properties.

To secure an auction finance loan, various factors come into play. Lenders in this field prioritise the security of the property and the loan-to-value ratio (LTV) over a flawless credit history.

While certain lenders may consider additional aspects such as your credit score, employment status, financial obligations, and income, others may not.

Purchasing a property at auction can be a smart move for several reasons. Firstly, you have the chance to snag the property at a discounted rate, which means you could potentially earn a profit down the line. Plus, the process is much faster and more secure than traditional real estate purchases.

When you make a bid at an auction, it's legally binding, so you don't have to worry about the seller backing out or another buyer swooping in at the last minute.

When it comes to auction finance, having an exit strategy is crucial for both individuals and businesses.

There are four common exit strategies to consider:

• Paying off the loan in full

• Exiting early (with a possible fee)

• Refinancing with a different lender

• Selling assets to raise funds
  

Paying off the loan in full is the most straightforward option, while early exit can limit interest and offer more financial flexibility.

There are several fees associated with Auction Finance that you should keep in mind:

• Broker fee: This fee covers the arrangement of the loan by the broker.

• Lender facility fee: When the lender provides the lending facility, they may charge a fee.

• Valuation fees: Obtaining a valuation of your property is crucial in the Auction Finance process.

• Lender legal costs: As the borrower, you are responsible for covering the lender's legal costs.

• CHAPS fee: This fee is a standard flat fee that is associated with the Auction Finance process.

• Exit fees: Some lenders may charge an early exit fee.

• Redemption administration fee: Completing the loan involves various administrative duties, such as removing the charge over the property.

When considering Auction Finance, it's important to be aware of these various fees. Remember, each fee can vary depending on your specific circumstances.