Auction Finance

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Home » Bridging Loans » Types of Bridging Loan » Auction Finance

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What is Auction Finance?

Auction finance is another name for bridging loans or bridging finance. Bridging loans are used to purchased properties at auction as they can comfortably be completed in the 28-day completion timescale.

Read more on auction finance below.

How Much Can I Borrow?

We can raise auction finance from £25,000 with no maximum loan size and fund up to 80% LTV (loan to value), or up to 100% with additional security.

If you’ve purchased the property under value, we may be able to fund 100% of the purchase price.

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, if needed.

How Long Does it Take to Complete?

We understand that although you have 28 days to complete the purchase after successfully bidding on a property at auction, it doesn’t always work out as planned.

No matter what your deadline is, we have access to lenders who can complete your application on time.

Where legal work and valuations are already complete, for instance, where a lender has withdrawn their offer late in the day, we have lenders with the capability to complete on the same day that the application is submitted.

What Properties Can I Borrow Against?

We can consider almost any security, including the following:

  • Residential Property
  • Retail Units
  • Property in a Poor State of Repair
  • HMOs
  • Semi-commercial Property
  • Land With Planning
  • Land Without Planning
  • Farms
  • Leisure Complexes
  • Hotels
  • Guest Houses
  • Pubs
  • Care Homes
  • Shops
  • Offices

Residential Auction Finance

We can secure residential auction finance on a regulated or unregulated basis up to 80% LTV.

Loan to Value55%65%75%
Interest Rate0.44%0.54%0.64%

Buying Property for Refurbishment

We can secure property for refurbishment, including title splits and conversions within 28 days and up to 70% of GDV (gross development value). Rates start at 0.44% per month.

Loan to Value55%65%75%
Interest Rate0.44%0.54%0.64%

Commercial Property

Commercial property can be funded up to 75% LTV, with rates starting at 0.65% per month.

Valuation reports for commercial property can sometimes take slightly longer to be undertaken, meaning it’s important your application is submitted ASAP.

Loan to Value55%65%75%
Interest Rate0.65%0.70%0.75%

Development Plots

When you’re looking to secure a plot at auction, we can fund the acquisition and development. ABC can fund land up to 65% LTV and can usually achieve rates from 0.95% per month for smaller plots.

For larger plots with planning, where development will commence immediately, we can offer full development finance from 5.65% over one month LIBOR.

How Do Auction Purchases Work?

When buying a property at auction, there are certain rules that must be followed.

Firstly, the winner bidder must pay 10% of the purchase price on the day of the auction and must complete the purchase within 28 days.

Why Do I Need Auction Finance?

Traditional mortgages can take time to complete, especially for unusual or commercial security. As a result of this, completing your purchase within 28 days may be an issue where finance is required to complete.

Unlike mortgages, bridging loans can often be completed within 10-14 days, as such, they have become a popular option for those looking to finance auction purchases.

Why Use an Auction Finance Specialist?

Although this type of finance can complete quickly, that’s not to say that this will always happen.

The application process is not as straightforward as people often think and the key to making sure there are no delays comes down to solving problems quickly as they arise.

There will always be questions and experience is crucial in managing the process.

No matter what situation arises, an experienced auction finance broker will usually have experience to draw on, reducing the risk of issues with your application.

Getting an Agreement in Principle Before the Auction

As you’re committed to your purchase once you are confirmed at the winning bidder, it’s important to make sure that you will be able to secure the funding that you need.

We are happy to work with you in the lead up to the auction to provide you with a underwriter backed agreement in principle.

In addition, we can assess any points that you may be concerned about specifically, such as credit history issues, problems with the property or title or your proposed exit route.

Refinancing Your Auction Purchase

Once your purchase is complete, we are happy to work with you through the entire life of the loan to ensure that your planned exit route is on track.

Where your exit strategy is to refinance to a mortgage, we are happy to arrange this for you, and can manage the entire process.

about-the-author-gary-hemming

About The Author

This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

Gary Hemming CeMAP CeFA CeRGI CSP  -  
Commercial Lending Director

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