Auction loans and how bridging finance can help

To complete a property purchase at auction, including commercial property, the buyer must pay for the property within a certain time frame, often 28 days. Obtaining a mortgage from a high street lender is often impossible under such strict time constraints, therefore a bridging loan, which can be known in these circumstances as an auction loan, is the ideal way to raise the finance required quickly, ensuring you adhere to the auction time scales, set by the auction house.

Auction finance allows you the opportunity to find the property that is right for you, and we are here to help you open the doors to your auction purchase.

We are experts in auction bridging finance, and our underwriters regularly speak at property auctions, to provide information on our auction finance services to those that may need it. We can do this at an online auction during the current climate, alternatively when everything returns to normal in person at the auction house.

Their experience means they are equipped to deal with any scenario that may arise during your auction purchase. Therefore, reducing the risk that the transaction would not complete.

At MFS, we help our clients ensure that their purchase runs smoothly. Our process is simple and provides you with a bespoke bridging finance service that is tailor-made to suit your financial needs. Our loans are designed with only you in mind, and are fast and flexible, with competitive rates.

What is auction finance, and does it apply to me?

Our auction finance is used to pay for property investments bought through auctions and are therefore intended for quick payments with a short turnaround time. Our bridging loans allow you to purchase property in this way. We provide you with the money you need to complete the property purchase within the time frame.

Auctions can be a great place to find old properties with great potential to invest, build property portfolio and increase profit. Whether you are looking to buy-to-let or refurbish an old property to sell on at a later date, we are here to help.

We understand that auctions are not just for seasoned property investors, so if you’re new to the auction community, that’s no problem at all. We will be with you every step of the way, guiding you through our process and answering any questions you may have.

The process of buying at a property auction

As the winning bidder, you will be given 28 days to complete the purchase

Our bridging loan product gives you the money you need to complete the property purchase within the allotted time frame

What we do and why we are good at it

When it comes to buying your first property at auction, or your hundredth, remember this: Don’t panic, we’re here to help.

We pride ourselves on putting our clients first, so we tailor our bridging loans to suit your specific needs. Completing a property within such a limited time span can be tricky with a traditional mortgage, even more so if you are looking to use a commercial building or a more unusual property as your security for the loan.

Bridging loans are considerably quicker, with our completions being from as little as three days, even with complex circumstances. Our lending period also ranges from 3 – 18 months and with no early repayment charges, if circumstances change then you can exit at an earlier date that works best for you.

Our underwriters specialise in the complex, and they aim to minimise any delays that can potentially arise. You will be provided with a dedicated underwriter for you case, who will happy to work alongside you before, during and after the auction, to address any issues that may be of concern for you.

Our loans will always require an exit plan, which can be through refinancing, re-mortgaging or even buy-to-let. So you will need to know that before we are able to provide a loan. They are also created around your personal financial position, so if you have any questions on your circumstances, or any aspect of auction finance, contact our underwriters today to discuss how we can help.

Lending Criteria

We are able to lend where many others may not, click here to see our full criteria.

Our bridging loans are available to individuals and businesses alike e.g. Limited, LLPs, SPVs, Offshore etc. and for an array of complex circumstances:

• Defaults
• Adverse Credit
• Existing IVA’s
• Repairing CCJ’s

If you’re unsure if you are eligible for auction finance, contact one of our underwriters today. They will be able to take you step by step through our process and answer any questions you may have.

What you need to know before buying a property at auction

Time

Buying at auction can be a great way to get the property you want and a great competitive price, but you cannot just go in blind.

Invest your free time into researching the type of property you want. This way, when you come to looking through auction catalogues, you will know what you want and therefore which auction will be worth your time attending.

Get your finances in place beforehand

This is the most important aspect. Confidence in your financial situation and knowing how much you have available to you, is a great starting place. If your finances are in place before the auction, it will decrease the risk of the purchase falling through, an losing your deposit.

This is where we come in, we are here to make the purchasing experience simple and smooth. Our underwriters will deal with the paperwork, ensure everything is in place and sort out any documents that are needed quickly and efficiently, so that you are able to purchase your property with no financial worries.

Visit the properties you are interested in

One thing you should keep in mind is there is always a reason why a property is at auction, and it is your job to find out what that reason is.

Understanding what issues come with a property means that you can take this into consideration when bidding, this way you can be ahead of the game and prepare any possible additional finances that you may need.

Here are a couple of things to keep in mind:

• Has the property been on the market, if so, for how long?
• Has the property fallen through? If so, why?
• How long have the previous owners been at the property?
• What is the property’s history?

Download the legal pack

Not understanding the small print can lead to trouble, so it is important that you understand every aspect of the legal documents. Speaking to a solicitor can ensure that you understand each characteristic of the property.

Certain aspects may be left out of the legal pack, so it is a good to receive legal advice. If you do receive an incomplete pack, be sure to ask further questions to understand why this is.