Bridging Loans for Auction Property
When bidding and then buying a property at auction, you must be confident that you can obtain all of the funds required to purchase outright in a very tight time frame of normally 28 days from successful bid. A successful auction bid can be a legally binding transaction similar to exchange of contracts in standard property transactions. This makes it extremely important that the time-scale is achieved otherwise strict financial penalties could be imposed on the bidder. With a successful auction bid you are normally required to pay the equivalent of 10% of the purchase price as a deposit which can be seized if the balance of the purchase funds are not available when scheduled. It will often not be possible to obtain a mortgage in the required time frame so unless the bidder has cash available, a bridging loan may be the best option. A bridging loan is a short term loan that can be used to purchase an auction property and is usually repaid when the property is either sold or refinanced onto what is deemed, more standard finance, such as a mortgage.
Don’t Miss Out on an Auction due to Financial Issues
The beauty of a bridging loan is that it can be arranged quickly and is more flexible than a mortgage. Lending decisions on Bridging Loans for an auction property can be made within hours of the initial enquiry to the lender and the money can be made available within days. This allows the bidder to easily complete the auction purchase within the time frame specified by the auction company.
Bridging finance can also be used to pay the 10% deposit if required by the bidder. The bridging loan company would need to agree this prior to the auction date but providing this is acceptable the 10% is normally secured against another property owned by the bidder or another person associated with the bidder.
It can even be arranged so that the bidder received 100% or more of the purchase price so that renovation funds and fees etc are covered. As before other properties will be required as security to enable this.
In order to get the best possible advice on bridging loans, please complete our short application form and we can get a specialist bridging loans expert to get in contact with you. We offer excellent bridging loan rates.