Loan amount:
£100k - £20m
Rate from:
0.59%
Loan-to-value:
up to 75%
Term length:
3 - 21 months
Overview
Auction finance allows you the opportunity to find the property that is right for you. At MFS, we help our clients ensure that their purchase runs smoothly and meets all the tight deadlines associated with buying at auction. Our process is simple and provides you with a bespoke bridging finance service that is tailor-made to suit your financial needs.
Key information
What is an auction finance bridging loan?
An auction finance bridging loan, which can be known in some circumstances as an auction loan or auction finance, is the ideal way to raise the finance required quickly.
We are experts in auction finance bridging loans. Unlike other lenders, we underwrite from day one. Meaning we’re able to find solutions for potential complex scenarios before they arise, reducing the risk that your transaction would not complete.
Why buy at auction?
– Renovate and increase property value quickly
– Build up a property portfolio and increase long-term capital gains
– Convert into multiple residential dwellings with the intension of buy-to-let
Purchasing auction properties can of be risky but there are plenty of positive reasons why you should consider purchasing a property by auction.
1) Speed
If you’re looking for a fast investment in a short timeframe, auction purchases are a great option. As they generally require a completion within 28 days, purchasing through an auction house is a faster route than buying via a realtor.
2) Long-term investment project to increase capital gains
A good way to utilise auction-bought property is to rent the asset as a single-use dwelling or convert it an Houses in Multiple Occupation. This then provides a monthly income that can help cover any maintenance fees or wear-and-tear damage from tenants.
3) Short-term renovation projects to increase property value
These properties can sometimes require a vast amount of renovation work. The act of refurbishing a property can raise the house value and help entice buyers, making it a quick resale job for the investor.
For properties in need of refurbishment, we have offer refurbishment loans in the form of permitted and light development products.
What is the process of buying at a property auction?
Online Auctions
Online auctions work in a very similar way. The key difference is often the bidding period. This can be a timed period of 30 days, where potential buyers can bid 24 hours a day. At the end of the 30-day period, the winning bidder will pay a deposit to guarantee the property. Here, the average deposit charged by auction houses is 2.5% (+ VAT) of the property bid.
What you need to know before buying a property at auction
Don’t panic, we’re here to help.
Here’s a few things to keep in mind when you’re looking at buying property from an auction house:
Time
Buying at auction can be a great way to get the property you want and a great competitive price, but you can’t 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’ll 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’re 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’re 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?
Contact us
Our other products
Our case studies
Residential in Sandy Bedfordshire, not registered with Land Registry & a tight deadline
Gross Loan Amount: £192,000 Property Value: £320,000 LTV: 60% Initial Circumstances Auction buyer already bid for the property and had paid the deposit. They were at risk of losing this ...
Grade II listed church, auction purchase with expired residential planning
Gross Loan Amount: £257,000 Property Value: £400,000 LTV: 64% Initial Circumstances A new broker came to us with a borrower who needed a bridge loan. The borrower purchased a grade ...
Taking advantage of commercial auction property and the buoyant property market
Gross Loan Amount: £1,755,000 Property Value : £2,700,000 LTV: 65% Initial Circumstances One of our recent bridging clients returned to us with a new opportunity that they wanted to capitalise ...