100% Auction Purchase of HMO in Manchester using Auction Finance

Positive Commercial Finance specialises in arranging Auction Finance for investors who need to complete property purchases within tight deadlines. This case study shows how we helped a landlord secure 100% funding to purchase an eight-unit HMO in Manchester by using equity in an existing buy-to-let property.

The Challenge

Our client identified an HMO in Manchester being sold at auction.

The property was already divided into eight self-contained units and also offered the potential to create two additional bedrooms, increasing the future rental income and overall value.

Although the investment opportunity was attractive, the client faced one major obstacle.

They were asset rich but cash poor. While they owned an unencumbered buy-to-let property, they did not have the cash needed to fund the auction purchase or provide a deposit.

As with any auction purchase, speed was critical. Once the hammer fell, the client would have only a short period to complete the transaction.

The client needed a funding solution that would:

• Provide 100% of the purchase price.
• Allow them to bid confidently at auction.
• Complete within the auction timescale.
• Maximise the value of their existing property portfolio.

Our Solution

Positive Commercial Finance structured a bespoke Auction Finance facility using the equity in one of the client’s existing mortgage-free buy-to-let properties.

Instead of relying solely on the auction property as security, the lender also took a charge over the client’s unencumbered investment property.

This approach provided 100% of the purchase price, giving the client the confidence to bid up to £400,000 without needing a valuation on the auction property before the sale.

As a result, the client was able to bid competitively, secure the property and complete the purchase within the required auction deadline.

Deal Structure

• Loan to Value (LTV): 100%
• Purchase Price Funding: 100%
• Loan Amount: £267,000
• Interest Rate: 0.75% per month
• Arrangement Fee: 2%
• Exit Fee: None
• Term: 12 months

The Outcome

The client successfully purchased the HMO at auction without using their own cash for the purchase.

By leveraging equity in an existing property, they secured a high-potential investment with scope to increase rental income through further development.

This case study demonstrates how Auction Finance can help experienced investors move quickly on auction opportunities, maximise borrowing and unlock the value held within their existing property portfolio.