We can pre-qualify an applicant so you can be sure that funding will be in place if your bid is successful.
What is Auction Finance?
Auction Finance is a form a bridging finance used for buying property at auction and specifically to complete a transaction quickly (typically within 14 or 28 days, in line with the Auction House’s requirements).
Auction purchases generally have to be completed within 28 days of the auction, and in most cases a conventional mortgage either cannot be arranged (if the property is not habitable) or will not be available within that time period.
The Auction House will usually ask you to pay 10% of the purchase price, plus the auction fees, at the time your bid is successful. You will then have a further 28 days to complete the purchase.
We can give peace of mind by pre-qualifying a purchaser prior to auction, to give the confidence that funding will be in place. A number of our lenders do NOT require valuations for auction purchases of residential properties, as they will work off purchase price.
Auction finance is used for auction purchases. This type of loan is designed to be fast and to enable you complete your purchase very quickly.
It is important that Auction Finance is used correctly, as it can be an excellent way to profit from properties with potential, which are not being sold on the open market via the more conventional Estate Agent channels. Here is how to make the best use of Auction Finance:
Research and Plan
The first stage is to identify what type of property you are going to buy. You will need to look at the online auction catalogue and chose a target property or properties. Consider how much work needs doing to the property. Is it in a good area? What are the selling prices and values of comparable properties in and around the area? Is the property good value, and can it generate a profit?
The next step is pre-approval. This is an initial approval process which might include credit checks, identification checks and a quick on-line assessment of the property. The aim of this is to give you the confidence that finance is available, and what amount of finance is available, in principle (usually as a percentage of the purchase price).
Win the Auction
Once you are all set and you have your pre-approval in place, you can go to the auction and start bidding. If successful, you will need to pay 10% of the purchase price there and then, possibly plus auction fees. You will then be given up to 28 days to complete the purchase through your solicitor. You will also be responsible for insuring the property straight away.
Fast loans! Designed to complete within the Auction House’s timeframe.
Loans from £25,000 with no maximum loan amount.
Auction Finance Rates start from 0.4% per month
No Exit Fees in many cases, however this Auction Finance Company specific.
No Valuations. In many cases a valuation report will not be required.
Free legals. Some lenders offer free legal fees. Bear in mind though that you will have to pay your own solicitor.
100% Auction Finance Available – 100% LTV available with other/ additional security.
Terms from 1 month to 2 years
For any property type in England, Scotland & Wales.
First Charge required on the property being purchased in favour of the auction finance lender.
Pre-arranged finance. You will have a Decision In Principle which allows you to make a bid at the auction with confidence.
Asset based loan. Auction Finance is based on the value of the property and there is more emphasis on the value of the property than the buyers income or credit status. Bad and poor credit scores are accepted.
Auction Finance can be used for properties that are currently un-mortgageable. This could include properties with no working kitchen or bathroom, which would therefore be deemed uninhabitable.
Defined exit strategy. A lender needs to know how you intend to pay the loan back, within the loan term.
Buyers name, address & date of birth.
If the buyer is a company, the directors names and address are also required as well as the company name and number.
Address of the property to be purchased.
A copy of the auction Sales Particulars.
Narrative summary of your plans/ intentions for the property.
Explanation of how the Auction Finance will be repaid (usually via a sale or refinance).
Different Auction Finance Lenders have different criteria so other information may also be requested.