Auction Finance | Finance Auction Purchases

Try our online comparison tool

Compare quotes instantly and apply online

GET A BRIDGING LOAN QUOTE
Takes around 4 mins

Or talk to an expert

Why use our comparison tool?

  • Compare interest rates for your auction purchase
  • View products available for a 28 day completion
  • Apply online and receive an AIP before the auction

Want to read more before you apply?

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

BRIDGING LOANS MENU

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 processed in the 28-day completion timescale.

Read more on auction finance below, or check out our guide section or auction finance calculator.

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 undervalue, we may be able to fund 100% of the purchase price if there is sufficient equity. This is a specialist service, so it’s important that you have a conversation with an expert upfront if you wish to proceed in this way. Fill out our enquiry form to get started.

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. We pride ourselves on working together with our clients, so if your need is urgent, just let us know.

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 provide a great personal service to allow a quick completion with no hassle. It 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Where legal work and valuations are already complete, for instance, where a lender has withdrawn their offer late in the day, we have lenders with the capability to complete on the same day that you apply.

Try out our calculator, or head over and read our guide section for more information on buying at auction. Alternatively, complete our online enquiry form to get started straight away.

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

What rates can I expect to pay?

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

Loan to Value 55% 65% 75%
Interest Rate 0.44% 0.54% 0.64%

Finance 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 Value 55% 65% 75%
Interest Rate 0.44% 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 you get started on your application ASAP.

Loan to Value 55% 65% 75%
Interest Rate 0.65% 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 works commence immediately, we can offer full development finance from 5.65% over one month LIBOR.

Use our bridging comparison tool or submit an online quick enquiry for a conversation with an expert who can guide you through the process. Alternatively, get started with our simple calculator.

How do auction purchases work?

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

Firstly, 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).

What happens if you buy at auction and can’t get finance?

You must have finance in place before purchasing a property at auction. 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.

By having an open conversation, you may get a limited extension of a week or two, anything beyond that is high risk and you are likely to lose out financially. This is why mortgages are not a popular choice for auction properties, as the processing is often too slow.

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 within 28 days may be an issue where finance is required to complete.

Unlike mortgages, bridging finance 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 a specialist?

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

The 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.

You will always get questions from the lender and experience is crucial in managing the process.

Providing an agreement for finance to the auction house

As you’re committed to complete 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 an 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 with mortgages

Once your purchase is complete, we are happy to work with you until your funding is repaid 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

Want to Know More…?

Use the panels below to read more on Bridging Loans.