Bridging Loan For An Auction Property

Finance your auction purchase fast using bridging finance from ABC Finance.

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When purchasing a property at auction, speed is of the essence, as in most cases, you must complete your purchase within 28 days of the auction.

For this reason, many borrowers choose to take a bridging loan for an auction property purchase, instead of a traditional mortgage.

Whether you’re looking for a house in need of renovation, an investment property to flip or even land that you want to secure planning on, bridging finance could help.

We have a range of products tailored to fund auction purchases quickly, allowing you to bid with confidence.

In this guide, we break down what a bridging loan is, how much you could borrow, how much it will cost and how to get started. Read on to find out more, or get in touch to get a written quote within 1 hour.

Key Criteria

Max LTV

Up to 90%

Interest rate

From 0.39% per month

Charge types

1st, 2nd & 3rd considered

Term

1-36 months (maximum 12 months for regulated lending)

Interest type

Added to the loan, deducted or serviced

Completion timescale

2 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) – access to non-status lending with no credit checks

We assess all bridging applications on an individual basis

What is a bridging loan for an auction property?

A bridging loan for an auction property is a type of fast bridging loan that is used to fund auction purchases.

They are a type of short-term property finance that can complete well within the 28 days required for auction conditions, making them a popular option for property investors and homeowners alike.

Bridging is a temporary option that is used to complete the purchase. Once the property is purchased, you are able to refurbish it or refinance it to the lender of your choice.

Why do I need to take bridging finance instead of a mortgage?

As mentioned above, bridging finance is used for auction purchases due to the fact that the purchase must be completed quickly, but that isn’t the only reason.

Here are some other key reasons to consider a bridge:

The property is unmortgageable – If the property is currently unmortgageable, for example, is does not have a kitchen or bathroom, interim finance will be required.
You’re planning to renovate it – If you’re planning to renovate or extend the property, you’ll need suitable property refurbishment finance, rather than a mortgage.
You’ll be taking it through planning – If you need to secure planning permission on the new property before completing works, this will not be popular with a mortgage lender. In this scenario, a short-term bridging loan makes total sense.
You’re buying before your current property sells – If you’re buying a new property before selling your existing one, you may not meet the affordability requirements for a mortgage until your sale completes.
You plan to flip the property – If you’re planning to flip the property within a fairly short timescale, short-term finance allows is all you need. A mortgage, most likely with early repayment charges would be clunky, slow you down and is a poor fit for your needs.

Will I qualify?

If you’re purchasing at auction, have a suitable exit strategy and sufficient deposit then you have a great chance of qualifying.

The easiest way to make sure is to get in touch with us, and we will assess your application and provide a written approval in principle within 1 hour.

How much will it cost?

The main cost of a bridging loan for an auction property is the bridging loan rates and fees charged.

Interest rates start at 0.39%, with rates of 0.55-0.8% being common.

Generally, applications at a lower LTV will achieve lower interest rates.

How quickly can I get the money?

We can complete bridging loans within a few days for urgent cases, although the average application takes anything from 1-3 weeks to complete.

For auction purchases, we naturally select only the quickest and most reliable lenders to ensure that the deposit you put down when the hammer drops remains safe.

Can I get my application approved before the auction?

Yes, we always look to get your application approved before the auction to ensure that you keep the risk of failing to complete to a minimum.

Before the auction, we give you a written bridging loan approval in principle and can guide you on the details of safely bidding including working out a maximum price that you could consider paying.

Auction bridging finance FAQs

How much can I borrow?

We can offer bridging loans from £10,000 with no maximum loan size.

We offer specialist £1m+ bridging finance deals at low rates.

Loan to value will be a key factor in your maximum funding level. We can offer up to 90% for refurbishment projects, or 75% where there will be no value added.

Can I take out bridging auction finance without putting down a deposit?

Yes, we can fund a purchase without a deposit, if you can offer another property as additional security.

You will still need to fit within the maximum loan to value limit, split across both properties. These loans are called 100% bridging loans.

Will I qualify with bad credit?

Yes, we offer a range of bad credit bridging loan products for borrowers with missed payments, defaults, CCJs, mortgage arrears, IVA or bankruptcy.

When should I apply for finance?

It is best to get your application approved in principle before the day of the auction, ideally at least a few days before.

This will give you plenty of time to make sure your funding is secure and ready to go.