29th April 2019

Auction Bridging Finance

Being the winning bidder at a property auction doesn’t need to be a stressful rush to secure finance.

Did you know you can use bridging finance to help you buy property at auction? A short-term bridging loan is often the ideal financial vehicle for investments involving the purchase of property – including properties in need of refurbishment. And because bridge funding can be secured quickly, it allows commercial property and home buyers alike to take advantage of fleeting, auction-based opportunities.

Benefits of Buying Property at Auction

Buying property at auction typically involves paying a 10% deposit at the time of purchase, and then signing a contract to pay the remaining 90% within a 28-day period. Auction bridging finance can help you bridge the gap between those two financial events.

Some of the biggest benefits of using bridge financing to buy a property under the hammer include:

  • circumventing the lengthy, traditional house buying route,
  • gaining access to unusual properties (think lighthouses or former windmills, for example) that estate agents aren’t set up to market,
  • avoiding the risk of having your property purchase fall through at the last minute, and
  • being able to see what others are bidding, so there’s less chance you’ll pay more than you need to

The property auction process is completely transparent, and it’s a great way to avoid drawn-out and uncertain buying procedures.

At the same time, however, property auctions have become an increasingly popular way for buyers of all types to gain exposure to potential investments. When you find a property you like, it’s important that you act quickly. Fortunately, bridging loans for residential property, commercial buildings, land, and buy to let properties are purposely designed to help raise funds fast.


Fast Bridging Loans Let You Take Advantage of Property Deals

Using bridging finance solutions to fund your personal or commercial property purchase can give you the time you need to set up a longer-term loan. While they’re not a substitute for a mortgage, bridge loans are a good idea in terms of your overall plan for covering the costs associated with short-lived property deals.

Bear in mind that bidding on an auction property means you’ll need to be prepared to meet certain financial obligations, such as:

  • the administration fees charged by the auction house,
  • payment of stamp duty,
  • the fees charged by your solicitor or surveyor, and
  • property insurance costs, once the contract is signed

But when you take advantage of bridging finance to buy property at auction, it can help transform those initial costs into a genuine investment.

Because many auction properties are in a poor state of repair, you’re likely to find some real bargains by signing up for auction house mailing lists, and subscribing to auction catalogues. Just remember that a house, flat, or any other property is only a bargain if the cost of restoring or renovating it is reasonable. To that end, you may want to explore a special type of property bridging loan known as a refurbishment loan to find out how you can affordably enhance an existing residential or commercial property.


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