How can I buy a property at Auction?
If you are wanting to purchase property at auction, you would find it restrictive if you tried to use long-term funding from a high street lender. It would simply take too long to arrange. So how do you fill this funding gap, between the long-term finance (mortgage) and the day in the auction room?
Property auction finance is simply another name for short-term or bridging finance. Where properties are sold on a tight schedule auction finance can be arranged quickly, ensuring that it fits neatly into the fast purchasing process.
Whilst short-term finance has its benefits, consider these points before proceeding:
- Short-term bridging finance is more expensive than mainstream mortgage products
- Administration and legal fees tend to be higher
- You should have a backup plan should your repayment strategy fail
- Beware of all costs and fees
We would recommend that you arrange your finance before you bid, but this is not a necessity. However, you will still be required to pay 10% of the final selling price on the day and the remaining 90% within 28 days.
Generally, lenders will base how much you can borrow on the purchase price/guide price and typically lend up to about 70%. However, you should be aware that properties rarely sell at the reserve price and you may end up paying more and so need to ensure you can fund a higher amount if required.
Call us for the right advice
At Aspire Financial Services we know how to arrange Auction Finance and Bridging Loans. With access to dozens of lenders, call us to ensure you are getting not only the best, but the right deal.
Book a free 30-minute introductory call.