Auction Finance

NAVIGATING PROPERTY AUCTION FINANCE: A PATH TO YOUR NEXT PROPERTY

 

The allure of acquiring a property at auction is undeniable. The fast-paced environment, the competitive bidding, and the chance to snag a unique property at a potentially lower price can be quite enticing. However, the auction world operates on a different rhythm, with its own set of rules and timelines. To successfully navigate this landscape, one must be well-prepared, especially when it comes to financing.

 

UNDERSTANDING AUCTION FINANCE

 

Auction finance, often synonymous with bridging loans, is a specialised financial product designed to fit the unique demands of auction purchases. It’s a short-term funding solution that fills the interim between a winning bid and securing a more permanent form of financing, like a mortgage.

 

It's a specialised form of lending and is designed for speed and efficiency, allowing investors to move quickly when they spot an opportunity. This article, amongst other things delves into the importance of speed when buying at auction.

 

WHY DOES AUCTION FINANCE NEED SPEED?

 

The gavel falls, and within moments, a property is sold. For the successful bidder, the race against time begins, with typically just 28 days to complete the transaction. This is where auction finance becomes the ace up the sleeve of savvy investors.

 

In the fast-paced world of property auctions, timing is everything.

 

It's a specialised form of a bridging loan and is tailored for the breakneck speed required in auction purchases.

 

Unlike traditional mortgages, which can take weeks or even months to arrange, auction finance can be pre-approved and funds released in a matter of days. This rapid turnaround is crucial because usually a 10% deposit is required on the day of the auction and the balance of the purchase price is required within a month.

 

Why Does Speed Matter?

 

1. Avoiding Penalties: Failing to complete on time can result in forfeited deposits and potential penalties.

 

2. Winning Bids: Pre-qualified buyers and investors can bid confidently, knowing they have the means to quickly seal the deal.

 

3. Capitalising on Opportunities: The property market waits for no one. Auction finance ensures investors don’t miss out on lucrative deals due to funding delays.

 

4. Competitive Edge: In a bidding war, the assurance of fast funding can give investors a distinct advantage over those relying on slower funding methods.

 

THE MECHANICS OF AUCTION FINANCE

 

It works by providing a short-term loan that covers a percentage of the purchase price, minus the deposit already paid.

 

The loan is then repaid either through the sale of the property, the sale of another property or by refinancing to a traditional mortgage once any refurbishment works have been completed.

 

Key Features.

 

• Fast Approval: Decisions can be made within hours, and funds can be available in days.

 

• Flexible Terms: Loans can range from a £50,000 to millions, with terms from 1 month to 2 years.

 

• Tailored Solutions: Each loan is crafted to fit the specific needs of the property and the investor.

 

 

 

THE PROCESS OF SECURING AUCTION FINANCE

 

1. Preparation: Before stepping into the auction room, it’s crucial to do your homework. Understand the types of properties on offer, and identify those that align with your goals.

 

2. Financial Planning: Create a comprehensive budget that accounts for all costs associated with the purchase, including auction fees, renovation expenses, and any unforeseen contingencies.

 

3. Approval in Principle: Contact us to secure an agreement in principle. This gives you a clear idea of your budget and the confidence to bid within it.

 

4. Legal Readiness: Engage a solicitor experienced in auction purchases to ensure all legalities are promptly and efficiently handled.

 

CONCLUSION

 

Auction finance is more than just a means to an end; it’s a strategic tool that empowers buyers to act decisively in the competitive auction environment.

 

With its unparalleled speed, flexibility and an approval in principal, it can help turn your aspirations into reality.

 

Whether you’re a seasoned investor or a first-time buyer, understanding how to leverage auction property finance can make all the difference at your next auction.

 

The need for speed in auction finance is undeniable. It’s the fuel that powers the engine of opportunity in property auctions. By providing quick, flexible funding, it enables investors to act swiftly, secure in the knowledge that their financial backing is as ready and responsive as they are. This article highlights the essence of auction property finance and its pivotal role in the world of property auctions. The ability to move quickly and decisively is what sets successful investors apart.

 

Remember, while while this type of funding can be a game-changer, it’s essential to seek advice from a financial advisor to ensure it aligns with your long-term financial strategy.

 

APPLYING FOR AUCTION FINANCE

 

Before you begin the application process.

 

Consult with an Expert Broker

Reach out to an experienced broker, give us a call, we understand the timescale implications that must be adhered to and can guide you through the intricacies of the process, help you explore available options, and provide personalised advice.

 

Understand How It Works

• Auction finance is secured against the property or properties you’re buying. If you fail to repay, the lender has the right to take possession of the asset.

• Repayment typically comes from refinancing to a long-term mortgage once the value increases, selling the property that has been purchased or selling another property.

 

Who Is It For?

• Developers and Investors.

• Landlords: Planning to develop multiple properties for letting.

• Individuals: Buying one property before selling another.

 

Application Process

• Contact us and speak to an expert.

• Provide Documentation:

• Detailed business plan.

• Financial projections.

 

Receive Pre-Approval: If your project aligns with the criteria, you’ll receive pre-approval terms within 24 hours, this will allow you to bid with confidence knowing you will be able to meet the strict 28 day timescale for completion that is stipulated by Auction Houses.