Auction Finance – Take on cash buyers with confidence!

21 October 2019

Auction Finance – Take on cash buyers with confidence!

If the term ‘auction finance’ has caught your eye, it’s perhaps fair to say that you’ve seen an episode or two of Homes Under the Hammer. You’ve probably also wondered about buying a property that has seen better days at auction for a steal and restoring it to an income-generating asset. 

But anyone who’s ever been through the process understands only too well the real risks and the stresses involved. True, buying at auction can come with many benefits, but it’s certainly not for the faint of heart! Here are some quick tips about how it can work for you.

Giving auctions to you straight

Most auctions work on the basis that you snap up a property at below market value. But, due to the nature of auction properties, this comes with a much higher level of commitment when a sale is agreed. 

Because of this, buying with a traditional mortgage can be risky in the extreme. For example, if a 10% deposit has been paid at the auction, a lender might then refuse to secure a loan on it. And, with such a short completion deadline looming over the whole thing (usually 28 days), there would be little room to manoeuvre. 

If lending is required, a much better solution is to use dedicated auction finance. This is generally provided by bridging lenders at similar terms and rates.

Spot the difference

The primary difference between auction finance and using a standard bridge loan is that, for the former, the lender will:

  1. Take a look at the security in advance
  2. Credit score the application
  3. Review the legal pack 

All this, AND they will give assurance that funding will be available within the 28-day notice period.

Given that being assertive at an auction is essential for success, getting some kind of auction-specific finance organised in advance can give you an edge over anyone else relying on finance to complete.

Which loan is best?

This auction finance strategy can be combined with properties that are not normally suitable security for lending to generate wealth quite powerfully. 

Additionally, some loans – like those we have outlined below – can be taken over terms of up to a year. So, if extensive renovation or development works are required that can be accommodated. 

And because the lender gets a chance to review the property in advance, they can set terms. You know exactly what the costs will be before you walk into the auction room.

Frequently Asked Questions

[ultimate-faqs include_category=’auction-finance’]


Lender Matrix

Which lenders have specific auction property products?

Lender Matrix (Click to Expand)

LenderMax LTVMin LoanMax LoanLink
Crowd Property75%£100kNoneRead more
Interbridge Loans75%£100kNoneRead more
Ortus Finance70%£100k£25mRead more
Roma Finance70%£30k£1.5mRead more
Together75%£26k£2mRead more

If you are considering buying at auctions, speak to us first. We can guide you through the various options, as well as recommend the best lender for the job, and handle the process swiftly and efficiently through to completion. 

Auction purchases need not be a stressful experience, especially when you have a broker with a decade of experience you can rely on to get the job done.

Call us on 0207 183 1101 or contact us via our online form today to bring us on board.