Auction Finance
Bridging Finance to buy property purchased at auction.
You normally have four weeks to complete on a purchase when buying a property at auction. Some modern method allow up to eight weeks.
Traditional Buy to Let mortgage lenders find it difficult to complete within such a short period of time.
Modern methods of auction can allow longer so always check your contract to see how long you have.
There is a solution with a type of bridging finance called Auction Finance.
We have access to lenders who can provide a decision in principle on the property for you before the auction date to give you the comfort it can be financed subject to valuation.
We will always focus on how the bridging loan will get repaid. We see a lot of clients whose brokers have not considered this which can cause problems for you later in the process.
Case Study
Situation
We were approached by an experienced HMO property investor who had bought a property at auction. It was a tired six bedroom property in South London for £900,000.
It had no licence and wasn’t mortgageable due to its condition.
The client had been speaking to his existing broker who told him he could get a buy to let mortgage on the property. When the valuation was received the lender declined it, due to its condition.
He was now two weeks into the four week timescale and was in danger of losing his £90,000 deposit and the potential of being sued.
Our Response
We needed a lender who could deliver within this timescale and we knew we could get an offer out quickly from of our lenders who would prioritise the case due to auction conditions.
We were more concerned about the client’s solicitors and their ability to deliver.
We knew a firm who was on our lender’s panel very well and after speaking to them they confirmed they could act for both the client and the lender and were confident that the deadline could be achieved.
As we knew the lender’s criteria we instructed the valuation before the application had been assessed and the lender’s solicitor emailed their requirements across to the sellers whilst we waited for the report. Three days later the valuation was back and acceptable.
Result
All the supporting documentation was provided by the client quickly to his solicitors who were now ready to complete by the due date.
The client successfully updated the property and it’s now a profitable addition to his portfolio.
If you need more information on Auction Finance contact us on 01565 654005