Buying a property at an Auction?

We offer Auction Finance packages from all UK Bridging Lenders specialising in quick decisions and prompt availability of funds.

auction bridging finance

Auction Bridging Finance – A Swift Solution to a Ticking Problem

Buying a property – whether residential, commercial or unutilised – invariably requires external financing. There are quite a few mortgage products available out there that can help you raise the funds required to finance property acquisition projects.
These, however, aren’t always what the need of the hour demands. In the eyes of many investors and businesses, the best time to buy a property is when it is being foreclosed or auctioned. This is a great idea, as such properties are usually available at a price point that hovers below the market prices. But financing the purchase of such properties with old-school mortgages isn’t just unrealistic, it’s entirely impossible. An auction bridging finance package aims to answer the questions posed by time-sensitive funding problems.

At Commercial Finance Network, we collate, curate and combine the best asset finance deals from an exhaustive panel of whole of market lenders to match your requirements.

What is an Auction Bridging Loan?

An auction finance package is a bridging loan designed specifically around the requirements of an auction property buyer.
Being a bridging loan at its core, every auction finance package can be treated as a specialty short-term mortgage. The usual repayment tenure that lenders prefer for such bridging loans can be anywhere between 6-12 months. The interest is payable on a monthly basis. Most lenders also usually agree to waive the early repayment charges.

What Makes Auction Bridging Finance Better than Regular Mortgages?

There are many factors that make an auction bridging loan a more useful financing tool than regular mortgages.

Auction Specificity

Other mortgage products work around the valuation of the property and the available collateral. On the other hand, an auction finance package can base itself entirely around the collateral. So, if you’re buying a property at an auction, and the lender doesn’t agree with its valuation, you can still manage to get a bridging loan, if you can put up another property as a collateral.

Ease of Access

Regular property mortgages require lengthy paperwork to fall in place before you see the funds in your account. If it’s a utilised property, renewal of planning permissions further lengthens the entire process. Auction bridging finance usually bypasses all these hurdles, immensely increasing the accessibility of funds for borrowers.

The Speed of Processing

We’ve saved the most important bit for the last.

If you’ve ever taken a property mortgage in the past, you’d know that months pass before you can use the funds. This period of waiting makes such mortgages utterly useless for auction purchases. An auction bridging loan can be processed within days, allowing you to come good on the AIP you enter into at auctions. We will be talking more about this in the following part of this article.

How Does Auction Bridging Finance Work?

To understand how auction bridging finance works, it’s important to first understand how property auctions work.

  • Interested buyers are required to register their presence beforehand.
  • On or before the day of the auction, all interested buyers are required to deposit a certain amount of money as a security deposit. This deposit is usually a percentage of the market value of the property, as determined by the seller. Most auctions require the interested parties to put up anywhere between 5 to 15% of the market value as a deposit.
  • On the day of the auction, the highest bidder gets to enter into a formal agreement in principle (AIP). The auction house refunds the security deposits of all other parties.
  • The highest bidder can utilise a fixed, pre-determined time window (up to 28 days) to complete the purchase.

As one can observe, the entire process is time-sensitive. Failing to complete the purchase within 28 days forces the highest bidder to forfeit their security deposit. Therefore, it’s very important to know that your auction finance application meets the approval, and the funds become available with enough time to spare.

Auction Bridging Finance – Fast Turnaround, Lowest Interest Rates

Commercial Finance Network, being a leading whole of market broker in the UK, has all the resources needed to help you finance your auction property purchases. Working closely with lenders who specialise in turning around bridging loan applications within days, we make sure that your wise investment moves reach a profitable conclusion.

Contact us to speak with one of our Auction Bridging Loan Experts today!