Auction
What is auction finance?
Auction finance is a fast, short-term loan designed specifically to fund property purchases bought at auction- it is a type of bridging finance.
How does auction finance work?
Once your bid is accepted at auction, you exchange contracts immediately (usually with a 10% deposit) and are legally committed to completing the purchase – typically within 28 days or the modern auction strategy being 56 days. Auction finance is arranged either before or immediately after the auction for a quick turnaround. The lender will assess the property and exit strategy and make an offer usually within days.
How quickly can auction finance be arranged?
Speed is the whole point of this product. Many lenders can complete within the standard 28-day auction deadline, and some can move faster. The borrower must have all their paperwork to hand for it to be assessed and having the right legal team working for you the borrower is of paramount importance.
Should I arrange finance before or after I win the bid?
Before if possible although this is not to say that it is not possible after winning at auction. Knowing your numbers before bidding puts your mind at ease that you know you can fund the deal if you win.
Should I arrange finance before or after I win the bid?
Before if possible although this is not to say that it is not possible after winning at auction. Knowing your numbers before bidding puts your mind at ease that you know you can fund the deal if you win.
What happens if I don't complete my auction purchase in time?
Missing the completion deadline can mean losing your deposit – usually 10% of the purchase price – and potentially being liable for further costs if the seller re-markets the property at a loss. Auction houses tend to be very strict with this criteria.
How much deposit do I need for an auction purchase?
Auction houses typically require a 10% deposit on the day of the auction (sometimes with a buyer’s premium on top), payable immediately to exchange contracts. Lenders usually require you to have around 30% of the purchase price as deposit (including the 10% already paid as deposit to the Auction house)
What types of property can auction finance be used for?
Auction finance is flexible and commonly used for residential properties, HMOs and multi-lets, commercial and semi-commercial property, land, and properties that wouldn’t qualify for a standard mortgage.
Can I get auction finance on an "unmortgageable" property?
Yes, this is one of the main uses of auction finance. It is important to know your exit strategy once you buy the property.
How much can I borrow with auction finance?
Borrowing is typically based on a loan-to-value (LTV) of the property’s purchase price or valuation, commonly up to around 70-75%, though this varies by lender, property type, and your circumstances. Because pricing and terms differ significantly across the auction finance market, it’s worth getting a proposal based on your specific property rather than assuming a standard rate applies.
What's the difference between auction finance and a standard bridging loan?
They’re closely related; auction finance is essentially a bridging loan structured around auction timelines and deadlines specifically. The key difference is speed and process: auction finance lenders are set up to move within the tight 28-day completion window auction purchases require, whereas a general bridging loan may follow a more standard timeline. In practice, many lenders offer auction finance as a specific product line within their bridging range.
How do I repay auction finance once the purchase completes?
Most borrowers repay either through selling the property (common with light-refurbishment or “flip” strategies) or refinancing onto a standard mortgage .Your exit strategy is one of the first things a lender will want to understand, since it directly affects how they assess the application.
Can I use auction finance with bad credit?
Yes, we will use specialist lenders that will allow it. Auction finance lenders tend to focus more heavily on the property’s value and your realistic exit strategy than on a perfect credit history, which makes this route more accessible than a standard mortgage for some borrowers.
Can first-time buyers or first-time investors use auction finance?
Yes, although not recommended as it can be a high-cost option if anything fails. If you’re new to property auctions, it’s especially worth getting finance and legal advice sorted well before auction day, since the process moves quickly once your bid is accepted.
Can you help me work out how much I can bid at auction?
Yes. One of the benefits of arranging auction finance before bidding is that you can establish a realistic budget and understand the likely financing costs before you make a bid. We can assess the proposed purchase, your available deposit and your intended exit strategy to help establish whether the deal is potentially financeable.
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