Buying a property at auction gives you a fast way to get a bargain, but it also means meeting tight deadlines and making big financial commitments upfront. However, a bridging loan can help you solve a lot of problems when there’s an opportunity you don’t want to miss out on. A short-term bridging loan can help you buy quickly even when you don’t have the funds available elsewhere. Let’s take a look at how a auction bridging loan for auction property buyers can be so helpful.
Why Auctions Are Different to Normal Property Buying
When you buy a property at auction, you normally need to leave a 10% deposit on the day and complete within 28 days. This isn’t going to leave you a long time to arrange a mortgage, especially if surveys or paperwork are delayed.
A bridging loan can be the perfect solution in this situation. A bridging loan for auction property UK buyers will give you fast access to funding so you can pay the balance and complete on time. It’ll also give you the flexibility to arrange longer-term finance or make changes to the property so you can sell it on or let it out.
How Do Bridging Loans Work at Auction?
Bridge loans are short-term, interest-only loans which are secured against assets like property or land. They can usually be arranged in a few days, which makes them ideal for purchases where time is of the essence. We can get you an answer on your application quickly so you can bid with confidence. Before the auction takes place, you can get a decision in principle and funding approval so you’ll already know how much you can borrow.
If you win the auction, you can then pay the deposit and use the bridging loan to cover the balance. Once the property is officially yours, you’ll be able to sell it, renovate it and refinance it with a mortgage or let it out to tenants.
Who Can Use a Bridging Loan for Auction Property?
These loans are very popular with first-time buyers who want to flip or refurbish properties. They’re often used by landlords who want to expand their portfolios and developers who want to turn around projects in a short period of time. A bridge loan could be the best solution for you if you need swift access to funds to meet an auction deadline.
You’ll have the best chance of getting approval if you have a clear exit strategy that shows lenders you can repay the loan within the agreed term. Your exit strategy can be something like selling or refinancing the property. You could also repay the loan with forthcoming inheritance funds or a lump sum from somewhere else that you definitely know is coming.
