Auctions are a popular way to purchase property, and brokers are being increasingly sought to help bidders purchase homes under the hammer.
Many properties at auctions sell for less than market prices. Most property will be vacant and there will be no buying chain. Once the property has been purchased, the buyer can move in.
Around 80% of auction properties are bought for cash, but this does not mean that non-cash buyers cannot buy auction property. The difficulty that many non-cash buyers face is the speed in which finance has to be in place. After a successful bid is made, a 10% deposit will be needed to secure the property. The remaining 90% is due within 28 working days. To apply for and have funds available by a standard or commercial mortgage can take longer than these, though.
The solution is to use a bridging finance broker. There are many specialist lenders who provide short term bridging loans to complete auction property purchases. A broker will be able to find the most suitable lender for a borrower. The bridging loan funds can be available well before the 28-day deadline has been reached.
The bridging loan will only be needed for a short time to bridge the gap between buying the property and completing a longer-term loan. If the property bought needs renovations, a bridging loan can be used to finance the building work.
It helps to use a bridging loan broker, who can also arrange a mortgage that can be used to repay the loan.