Auction Finance
If you’re looking for finance quickly, we can offer great rates for auction purchases from lenders that can complete within 3 days
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Specialist auction finance is used to fund the purchase of property at auction. To ensure that your loan completes quickly, it’s important that you understand exactly how this type of finance works.
At ABC Finance, we can access the lowest interest rates, the fastest lenders and can reduce the risk of your auction purchase failing.
Get in touch to get the best deal on your bridging loan.
Auction finance explained
What is auction finance?
Auction finance is another name for bridging loans or bridging finance.
Many bridging lenders have specialist auction finance products designed to complete auction purchases quickly. In some cases, the application process is further streamlined as the requirement for a property valuation can be waived.
As mentioned earlier, auction finance is a short-term loan, usually with a loan term of 1-18 months, although terms of up to 36 months are available. Regulated bridging loan terms are restricted to a maximum of 12 months.
Longer terms are available for unregulated bridging finance, commercial bridging loans and property refurbishment finance (when not regulated).
Read more on auction finance below, or try bridging loan calculator to work out your potential loan costs.
Why do auction purchases require specialist finance?
When buying a property at auction, the winning bidder must pay 10% of the purchase price on the day of the auction.
You must then complete within 28 days (for residential properties, commercial and land may have slightly longer deadlines to allow for more complex processing).
Should you fail to come up with the money at the end of the 28 days, you stand to lose your deposit and the right to buy the property.
Why not try our auction finance calculator?
What properties can I borrow against?
We can consider almost any security, including the following:
- Care Homes
- Residential Property
- HMOs
- Property in a Poor State of Repair
- Semi-commercial Property
- Shops
- Offices
- Retail Units
- Land with Planning or without Planning
- Farms
- Leisure Complexes
- Hotels
- Guest Houses
- Pubs
Key product features
Key Features
Max LTV
Up to 85%
Interest rate
From 0.39% per month
Charge types
1st, 2nd & 3rd considered
Term
1-36 months (maximum 12 months for regulated loans)
Interest type
Added to the loan, deducted or serviced
Completion timescale
5 days – 3 weeks
Criteria
Residential, commercial property or land acceptable
Available to individuals, partnerships, LLPs, Ltd companies, offshore companies, foreign nationals and pension funds
Minimum applicant age 18 years – no maximum age
Available in England, Scotland, Wales and Northern Ireland
Adverse credit accepted (on a case by case basis)
How much can I borrow?
Loan sizes
We offer auction finance from £10,000 with no maximum loan size.
Loan to value
We’re fund residential property up to 80% LTV (loan to value), or up to 100% with additional security.
Where the property you’re buying will be refurbished, we may be able to fund up to 90% LTV in some situations.
Term
We can offer terms between 1-24 months for unregulated loans. For regulated bridging loan applications, your maximum term will be restricted to 12 months.
Auction finance rates & costs
Rates
Auction bridging loan rates start at 0.39% per month for residential property. Most loans are offered at rates between 0.55-0.75% per month.
The lowest rates are usually reserved for lower LTV applications, with loans at 50% or below securing the best terms.
Greater equity in the property reduces the risk to your lender, which in turn reduces the rate that you’ll pay.
Fees
In addition to the interest charged, there are several fees which are usually charged. They are:
- Lender arrangement fee – This fee is charged by the lender and is usually 1-2% of the loan amount. It is paid on completion and can usually be added to the loan.
- Lender exit fee – Although it is becoming less common, some lenders charge an exit fee when the loan is repaid. Where charged, this would usually be 1 month’s interest.
- Broker fees – Although we don’t charge a fee for arranging a bridging loan, many brokers do. This fee is usually between 1-1.5% of the loan amount.
- Valuation fee – In some cases, a physical inspection of the property by a chartered surveyor is needed. In many cases, we can avoid this by undertaking an electronic valuation, which can save you money.
- Legal fee – This fee is paid to the solicitors for completing the legal work. Usually, both your own and the lenders legal fees must be met by the borrower.
How quickly can I get terms?
We always issue terms within two hours, but if your application is urgent, we can usually issue terms within 30 minutes. We pride ourselves on working together with our clients, so if your need is time sensitive, just let us know.
How to get finance to buy a property at auction
The information needed to make an application
In order to make an application, you will usually need to provide the following information:
- Details of the property to be purchased
- A copy of the auction sales particulars
- Details of your exit strategy
- Your own personal details
How long does it take to complete?
Applications can usually be completed in 7-14 days.
No matter what your deadline is, we have access to lenders who provide a great personal service to allow a quick completion with no hassle. The application process can be especially simple for residential properties, especially where there is a lot of equity in the properties.
Where legal work and valuations are already complete, for instance, where a lender has withdrawn their offer late in the day, we have lenders with the capability to complete on the same day that you apply.
Who offers auction finance?
Bridging loan lenders offer finance for auction purchases. Bridging lenders can be either regulated or unregulated – with regulated lenders being held to a higher standard in their handling of customers. If you’re nervous about taking out a bridging loan, using a regulated lender can offer peace of mind. Brokers can make the process of arranging auction finance far simpler, which is often vital given the tight deadlines that applicants must work to.
