How can I buy a property at Auction?
When planning to purchase a property at auction, it would be restrictive if you tried to use long-term funding from a traditional high street lender. With it simply taking too long to arrange you would probably miss your opportunity to buy the property you intended to.
So how do you fill the funding gap between the long-term finance arrangement (mortgage) and the buying day in the auction room?
Property auction finance is just another name for short-term or bridging finance.
When properties are sold on a tight schedule at auction, finance needs to be arranged quickly and smartly, ensuring that it fits into the fast purchasing process.
Short-term finance has its benefits; however, you should consider these points before proceeding:
- Short-term bridging finance is usually more expensive than mainstream mortgage products
- Administration and legal fees are generally higher
- Have a backup plan just in case your repayment strategy fails
- Be aware of all costs and fees
We would recommend that your finance is arranged before you bid, however this is not an absolute necessity.
You will be required to pay 10% of the final selling price on the day and the remaining 90% within 28 days.
Generally, lenders will decide how much you can borrow on the purchase price or guide price and typically lend up to about 70%. However, be aware that auction properties often sell at a higher price than the guide price, so you may need to pay more than expected. So, in this circumstance ensure you can fund a higher amount if required.
Call us for the right advice
At Aspire Financial Services we specialise in arranging Auction Finance and Bridging Loans. With access to dozens of lenders, call us and ensure you are getting not only the best, but the right deal for you.
Book a free 30-minute introductory call.