Auction Property Funding
Suitable for auction purchases, short-term borrowing, and buying an asset quickly
Buying at auction can be exciting, and it also means that once the hammer goes down the property will be yours – no messing about with bids and counter bids through estate agents!
However – you need to have your financial ducks in a row. Typically you’ll need to pay 10% of the purchase price within 48hrs and be ready to complete on the property in 28 days.
This means you need some nimble finance lined up. You might also want to line up some refurbishment funding against another property see here.
Amount : Up to 70% of the property value is normal. You might see “100% of purchase price funded” – this is possible but it requires additional security so it’s not really “100% of the purchase” it’s say 60% of the purchase and 40% of something else!
Term : Up to 23 months, really this is short term purchase funding whilst a buy-to-let type product is organised in the background, however beware a lot of lenders won’t refinance within 6 months of purchase (some will though).
Fees : This is not high street bank funding so typically lenders charge a 2-3% arrangement fee. Some lenders charge exit fees, but not all.
Interest rate : From 0.5 to 1.5% per month, so if you borrowed £100k this could be between £500 and £1,500 per month.
Other costs : Sometimes an admin fee and or management fee are applied. These are typically a few hundred pounds. Legal fees will be payable. Money transmission fees are typically payable (£30).
Lenders will support:
- Adverse credit
- Complex company structures
- First time landlord
Normally lenders will only lend if you are a home owner, this is often because a Personal Guarantee is taken and they might want recourse to your personal assets, but it’s also because a business lender doesn’t want you to live in the purchased property.
Think carefully about what you exit from auction finance will be – we can help you arrange a buy-to-let or commercial mortgage so that you know where you are headed. Please also read our guide on bridging finance here.
Speak to us today and we can advise what the current best rates are. If you want to move fast we can help you find both the funding and solicitors you need to get your deal done.
Get in touch here.