Tips to pursue before applying for auction finance
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.
To get auction finance, how much deposit is mandatory?
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.
How much will auction finance cost overall?
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 personal circumstance of the borrower
- Development experience of the borrower
- The present condition of the property
- Exit plan
- Borrowing limit
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.
Why ask thebusinessfunds for the best auction finance deal?
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.
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.