Are you interested in buying a property at the auction? Maybe, it is going to be a profitable decision for your business. However, you lack the capital you cannot extract from existing properties. In this scenario, property auction finance in the UK can let you bid against competitors.
It is an effective financing solution to fill up this funds shortage gap. TheBusinessFunds can assist you in finding the best-suited finance deal. With us, you can filter offers and review lenders in a few minutes.
The best thing is that a strict time deadline is not a significant issue for us. You will feel much more relieved to know about the other side of our services as one of the trusted auction finance brokers i.e.:
In the case of a novice borrowing entity, evaluating the credit score might make sense for the lender ahead of offering property auction finance. On the other hand, the finance providers can have a different perspective from seasoned business owners who know what they are doing. Besides, the project should appear legitimate and easy to execute according to them.
Auction finance is a financial arrangement that makes bidding for property effortless and doable on your part. A mandatory ritual to follow in this process is the prior calculation. It includes the amount you will take out, fees, deposit etc. One thing you can leave behind from auction finance rates here is broker fees. It is because we collect some commission from the lender, not you.
You will receive finance for auction property as the major category of bridging finance. It offers an exclusive opportunity to purchase a property at a discounted rate. Usually, the time duration from the dropping of the hammer till the completion of the transaction varies between 14 to 28 days. If needed, this sort of business loan helps you cover the purchase in even less than 7 days.
Remember that the countdown for final payment begins once the hammer hits down. The transaction must complete within the given duration. Stick to the time deadline set by an auction house or host to make the most out of this auction property finance. Utilise this funding to amplify potential opportunities for your property portfolio.
If you compare auction finance in the UK with Buy-to-Let mortgages, you will find that chances of acceptance are less and money arrangement is not possible within the specified time limit. Qualifying for mortgages is only possible if the property is in good condition. Above all, when you buy a commercial property at auction, you cannot emphasise much on the current condition.
Check what makes this funding a superior choice:
Swiftness in processing
You cannot ignore the speed aspect that is a blessing when you opt to get finance for an auction property. It is because the time to receive funding is the most significant risk in the case of a traditional mortgage. Getting funding to buy property at auction is possible within a few weeks.
It is impossible to arrange a mortgage on this short notice. If you want to rely on the traditional option, there is no problem. If you fail to gather the remaining property value on time, you will have to let go of the amount you have already deposited. Therefore, unfortunately, with traditional mortgages, you cannot expect swiftness in accessing money.
Flexibility of offer
It is gift-wrapped when you get an auction property on finance. You have the freedom to make adjustments to fetch the borrowed amount within the time duration you want. None will interfere in the process, even if the property condition is questionable.
As a business owner, you can map out the loan structure depending on your convenience and capacity. You will get full support from us as auction finance brokers.
Early exit facility
You can leave the agreement a mid-way by paying back early if you wish to upgrade to a better financing option. The best part is that we will not impose additional fees other than auction finance rates for early repayment.
You can reap the benefits of this feature by opting for a loan option with a longer duration. Feel free to consider this facility if you work on profitable development projects.
The primary purpose of getting this financing option should be auction purchases. The borrowing entity need not have to wait long to get funds to seal the property deal. The rightful usage of auction finance in the UK helps businesses profit by getting potential properties.
To make the best use of this financial aid, you must remember these necessary steps.
Arranging auction property finance is not possible for us but we can help you meet an ideal lender. However, we can give you some idea of how the finance providers approachable on our radar will assess your application before handing over money. We want you to put stress the following aspects:
Upcoming Plans: You must ask yourself what you want to do with the property. Most importantly, ensure the reason behind getting this property is convincing for the lender.
Need and capacity: Fixing the borrowing limit is possible when you know your need. Besides, you must not overlook the repaying term according to your capacity. Select an easily repayable amount by considering the overall interest rates.
Payback plan: The lender will be interested in figuring out how you have planned for repayment. It will act as an assurance they will need before giving a nod of approval.
The process to avail of this type of financing is simple. Every step, from approaching us to finalising the deal, will take place online. Thus, you must pay attention to the intermediate steps that are equally important to understand how you want to finance an auction property. These are:
Decide which property to choose
When you approach the lender, you must share details about the property. For this reason, you must brainstorm and finalise the property first. It can be more than one property, also. This way, you will get an idea about the rate of interest.
Let the lender takes on
Once your application reaches the lender, a few assessments will take place. It also includes independent valuation of the property. Above all, the lender will pay attention to your income streams. It will validate repayment possibilities.
Once the lender is convinced of your application, you can expect a provisional acceptance from the lender.
Go ahead with bidding
After getting acceptance from the lender, you can go ahead to attend the bidding. The prior knowledge about the amount you can borrow as auction property finance will help you decide how much you must bid for. With a proven history in property transactions, your chances of getting fair prices are quite bright.
Post winning the auction
Once you succeed in the bidding, you can give away the deposit amount to the auction house and let the lender pay off the rest. Refrain from bidding for an amount less than what the lender has agreed to offer to make a profit out of this deal. It will be a blunder as the lender will deny the whole deal.
An exit strategy is critical if you want to fetch finance on auction property. Lacking at this point can lead to a painful journey. We will help you devise a well-planned strategy to create a worry-free experience.
There are tips you must concentrate on while fetching this type of financing solution:
Confirming the exit plan
It means you have to strategise a clear plan on how to repay the amount until the term ends. Remortgaging or selling of commercial property as a part of the plan. However, it will depend on the scope for sale and the rules in the agreement.
Keep away unexpected complications by paying back within the duration. With this financing option, you can take advantage of the exit facility within 1 to 12 months of getting the property auction loan.
Checking the interest
The rate of interest will accompany the entire amount of the loan. You must not ignore it at the time of making an application. In this regard, you must know you will come across three forms of interest that are:
Retained interest: The calculation will start from the time you will owe. The amount of monthly interest will add up to it. It indicates that you will borrow the interest for the time being and return the entire amount at the end.
Recurring interest: It refers to the monthly interest. Every month the amount will keep added to the principal amount.
Rolled-up interest: It indicates the total amount of interest you will incur. The lender will club the interest figure with the loan amount. You will have to disburse the amount and interest at the time of repayment.
Auction finance in the UK opens the door for different opportunities, as the market is quite competitive. Nevertheless, it is irrelevant to think of getting 100% amount of the purchase value. On the flip side, you must know that you will have to provide 10% as a deposit.
You will receive a maximum of 75% LTV no matter how many proposals you receive. Depending on the risk involved in the process, it might drop to 50% to 60% of LTV. It means as a buyer, you will have to hand over a significant amount of deposit if the lender asks so.
So far as the cost is concerned, it will be more than what you will pay for traditional mortgages. Do not take the stress off! We are here to help you find loan proposals at the best auction finance rates. The overall cost of borrowing will vary depending on the following key points:
The borrowing cost will further include different ingredients like:
Administrative costs: It will directly go to the auction house. You must review the property listing details to know more. Some lenders charge a separate fee for administrative costs. Pay it by the due date of the term.
Valuation fees: The lender will charge this fee to cover the arrangement cost required for property valuation. Developing a valuation report follows once the assessment is complete. It should include all the essential deets.
Legal costs: The creation of the legal agreement and other aspects that need legal intervention carries an additional cost. You will have to pay for this also.
As auction finance brokers in the UK, we make it a point to elaborate on different property plans and financial requirements. We promise to work with you to search for lenders and finalise loan deals. Our main aim is to simplify the decision process in the following manner:
Reduce chances of rejection
Selection of the best offer from among the many by multiple lenders is tricky for the borrower. Every lender will have its rates and terms. The choice of a wrong offer can ruin everything.
We can step in here to help you with our market knowledge. We will assist you in landing a good deal that does not have the drawbacks of impractical rates.
Give importance to your preference
We will insist you present your ideas to us. It will help us understand your ability and requirement. We will share your application with our network lenders based on your preference to help you fetch the most lucrative offer matching your circumstances. Our forte would be to get you a property auction loan proposal based on the principal amount.
Pre-approval facility
We work with lenders who agree to provide a pre-approval facility. It lets you ideate the amount you should bid for. This will give you peace of mind and assurance before you enter the auction house. It becomes easy for you to plan for the bidding without exertion.
As a responsible broker, we always try to complete all the formalities from our end at the earliest. We also make sure the later steps should take little time. We agree to work with lenders who follow an organised process structure for property auction finance. In short, you can get a proposal immediately.
Here, you will get the option of paying interest in a monthly pattern. Besides, you can opt for retaining the interest payment from the initial loan. Then, you will not have to pay monthly. You can even get a combination of the two options.
You can pull out once the auction is over. However, it will be an expensive affair then. You will have to bear the baggage of heavy penalties. This incident will be a breach of the contract. You will lose the deposit amount.
Yes, this type of assurance is very much important. It comes in the form of a confirmation that you will receive from the lender about the maximum amount you will receive. It should be adequate to cover the price minus the deposit.
The term for repayment for auction property finance will vary between 6 to 18 months. Having a well-planned exit strategy is beneficial to pay back within the duration. Prioritise to work on it before you get into the agreement.
