How can we help you?
We invite you to get in touch via a free, no-obligation initial consultation.
Auction finance is a form of short-term financing designed to facilitate the purchase of properties at auctions. Finance is typically arranged before participating in an auction to ensure a smooth and successful transaction and can be used for a wide range of properties, whether this be residential, semi-commercial, commercial, or land. In the event of a winning bid, buyers typically need to pay a non-refundable deposit, often 5% of the purchase price, on the auction day. Full payment is usually due within 28 days, highlighting the importance of arranging financing early to meet these obligations.
Traditional mortgages are typically ill-suited for auctions due to their lengthier processing times. Not only would arranging a mortgage within this short deadline be extremely stressful, but this could also fall into many issues. For example, if the property does not meet certain requirements and as a result is unmortgageable.
Failing to meet the 28-day deadline may result in losing both the deposit and the property. Auction finance provides a faster and more suitable alternative.
Bridging finance for auction property
Auction finance is a specialised form of bridging finance specially adapted for properties purchased at auction. Bridging loans can provide an effective short-term financing solution to provide fast access to funds and offer the flexibility to arrange a mortgage at a later date for long-term financing.
Bridging loans are short-term loans typically secured against the property or land the loan will be used to purchase.
With tight deadlines to meet and decisions to make, our consultants are here to support you at every step of the property auction journey.
Discover why our clients confidently place their auction finance needs in our hands:
Unlike direct dealings with a single lender, a mortgage broker has access to a diverse network of lenders. This broad spectrum of options enables them to shop around on your behalf, ensuring you secure the most competitive rates and favourable terms.
After arranging auction finance, your mortgage broker will be there to help arrange your longer-term financing solution at a later date too. They will provide ongoing support, answering questions, addressing concerns, and assisting with future financing.
Using an expert mortgage consultant can help remove a significant level of stress to meet the typical 28-day deadline. We break down complex terms and conditions, ensuring you make informed decisions that align with your long-term financial goals.
Successful property auction buyers invest time into thorough research before the auction. Understand the type of property you are after, and identify the right auction for you.
Finance is a crucial step to your success at auction. Talk to an auction finance expert to understand how to finance the purchase and account for additional costs. Obtain an agreement in principle before the auction day as this will outline your maximum bid, finance plans, and borrowing capacity. Expert brokers can connect you with lenders capable of advancing loans to meet your short deadlines.
If you place a winning bid, you will need to pay a non-refundable deposit of typically 5% of the purchase price on the day and full payment is usually due within 28 days. Due to the tight deadlines, mortgages are typically ill-suited for financing auction property during these 28 days, and many opt for a bridging loan instead.
It is important to consider your financing plans at the later stages of your auction property as well as in the short term. This is also something that the bridging lender will usually ask for.
Whether your goal is renovating, selling, letting, or living in the property – Private Finance is here to help you at every stage. We can help you arrange a mortgage as a longer-term financial solution and arrange adequate insurance to ensure you are covered every step of the way!
