What is Auction Finance?
Auction finance is a type of bridge loan that bridges the gap between securing a property at auction and arranging long-term financing or selling the asset. It’s designed to meet the strict timelines of property purchase and provides funding for up to 12 months.
Key benefits include:
- Fast Funding: Access funds quickly to meet auction deadlines.
- Exit Strategy Flexibility: Use the loan term to refinance, renovate, or sell the property.
- Wide Property Range: From residential homes to commercial units, auction finance covers diverse property types.
Key Features of Auction Finance
Quick Decision in Principle:
Many lenders offer a decision in principle before the day of auction, allowing confident bidding.
Flexible Loan Terms:
Loan durations of 6–12 months give time to arrange refinancing or sale.
Loan Amounts and LTV:
Loan amounts depend on the property’s value, with LTV ratios typically between 65% and 75%.
Competitive Interest Rates:
Rates reflect the short-term nature of the finance but are competitive for rapid funding.
Tailored Solutions:
Loans are designed for varied needs, from residential to commercial property finance auctions.
Why Auction Finance Is Crucial for Property Auctions
Auction finance, also referred to as a bridge loan, is a short-term loan tailored for buying a property at auction. Here’s why it’s essential:
Speed of Funding
Auctions typically require completion within 28 days. Traditional mortgage processes, which can take months, are not viable. Auction finance ensures you can complete your property purchase on time.
Flexibility with Property Types
Properties sold at auction often include uninhabitable homes or commercial spaces needing extensive renovation. Auction finance lenders specialise in these types of properties, providing the flexibility you need.
Certainty of Completion
Failing to secure funds can result in losing your deposit and facing penalties. Auction finance provides the confidence needed to complete on the day of the auction.
Failing to secure funds can result in losing your deposit and facing penalties. Auction finance provides the confidence needed to complete on the day of the auction.
The Risks of Not Completing an Auction Purchase
Failing to complete your property purchase within the auction’s timeframe has serious consequences:
- Loss of Deposit: Your 10% deposit is forfeited.
- Legal Action: Sellers may pursue legal penalties.
- Additional Costs: Re-auctioning the property incurs fees, and your reputation with auction houses may suffer.
Auction finance minimises these risks, ensuring a smooth property finance auction process.
Why Work with a Specialist Broker?
A broker experienced in finance auctions can:
Save Time
Quickly connect you with lenders.
Secure Competitive Terms
Leverage a wide lender network for the best deals.
Simplify the Process
Handle paperwork and meet lender criteria.
FAQs About Auction Finance
What types of properties are eligible?
Auction finance supports residential homes, commercial spaces, and renovation projects.
Can I use auction finance without a long-term exit strategy?
Yes, but lenders prefer applicants with a clear plan, such as refinancing or resale.
How quickly can funds be accessed?
Many lenders release funds within 48–72 hours, depending on documentation.
What happens if I can’t repay the loan within 12 months?
Some lenders may extend the term or transition you to long-term financing, though fees may apply.
Why Choose The Landlords Broker for Auction Finance?
At The Landlords Broker, we specialise in property auction finance and bridging loans. Here’s what sets us apart:
Expert Guidance
Support from application to funding.
Tailored Options
Flexible terms to suit your investment goals.
Fast Access to Funds
Meet deadlines with ease.
Competitive Rates
A network of trusted auction finance lenders.
Secure Auction Finance Today
Don’t let strict deadlines or complex financing hold you back. Contact The Landlords Broker to explore fast and flexible auction finance UK solutions for your next property auction.