We're Auction Finance specialists
We arrange fast auction finance for auction property purchases, including Buy To Lets (BTLs), residential, mixed-use, commercial & land purchases.
We act fast, with instant decisions and can facilitate auction finance for properties well within your 28-day deadline.
- Market-leading property auction finance from £26,000 to £250m
- Monthly interest rates from 0.44% pm
(Lower rates for £700,000+ loans or less than 50% LTV)
- LTVs up to 80% (up to 100% finance if additional collateral is available)
- Automated valuation options and dual legal representation
- No monthly payments with interest rolled-up options
- Terms up to 24 months
- Available for auction property purchases in England, Scotland, Wales and Northern Ireland
We provide a fast reliable service to help you get the auction finance you need at the best available rates.
We consider all types of credit history including non-status and bad credit, and don't perform automated credit checks so there's no footprint from enquiring.
With incredible relationships with the UK's top property auction finance lenders including specialist lenders, family offices and private investors, we can source the auction finance you require:
up to £300k loans in 3 days
up to £700k loans in 7 days
up to £250m from 14 days
Where your timeline is critical and short, we're confident we can get your auction finance in place. Get your best no obligation quote today.
Residential auction finance
for UK residential property auction purchases such as
Uninhabitable properties repossessions, buy to let, HMO, buying a property with a short lease, property flips and investment purchases
Commercial auction finance
for commercial property investment and commercial land purchases purchased at auction
Our common-sense approach to property auction finance means we can often source auction finance lenders when others struggle to. Including if you’re self-employed, are making your first investment purchase, have no credit or less-than-perfect credit.
|Loan to value (LTV)||80% maximum|
|Loan term||1 to 24 months|
|Loan amount||£26,000 up to £250m|
|Interest options||Rolled-up, retained or serviced|
|Interest rates||From 0.44%|
|Decision||Immediate decision in principle|
Up to £300k in 3 days
|Early repayment fees||None|
|Availability||Secured on assets in UK & Europe
Individuals, Companies, SPVs
No credit & adverse credit considered
|Exit strategy||Sale or refinance|
We offer fast, innovative, flexible property auction finance to businesses and individuals throughout the UK. Our auction finance, which are secured on property or land, enable clients to quickly raise funds to acquire property.
Property auctions and the financial markets move quickly, and opportunities come and go in the blink of eye, making it difficult for businesses, investors, landlords and home buyers to acquire their next property or expand their portfolio.
This is compounded by the added complexities of buying a property at auction, wherein buyers are required to complete the purchase of properties won within 28 days. Buying a property at auction has many advantages though, most properties sold in this way are offered at below market rate prices enabling buyers to achieve great investment opportunities.
When it comes to financing properties bought at auction, the best way to secure funds is by using auction finance.
Auction Finance News, Stats & Opinion
News, opinion and insights from the bridging & auction finance experts
14th December 2022 1 minute read
31st October 2022 1 minute read
13th July 2022 5 minute read
If you're unsure how to purchase property using auction finance, what it is, how it can be used or how it works, we've created an easy to understand guide.
Property auctions are becoming increasingly popular among property buyers and investors, providing a unique opportunity to acquire a property at a discounted price.
To fund the purchase of a property at auction, most buyers will have to use a bridging loan. This article will provide an in-depth explanation of how auction property bridging loans work, what information is needed to be eligible, the key product features, the costs and interest rates you can expect to pay, and the alternatives you may want to consider.
Auction finance is sometimes known as auction property finance or an auction bridging loan, and are used specifically to purchase a property at auction. Often, an individual is unable or unwilling to use traditional lending sources to fund a purchase at an auction such as a traditional high street bank loan.
Auction finance fills this void by providing a loan with a fast turnarounds and less stringent criteria. It is a short-term loan with a repayment date usually no longer than 12 months away.
How auction finance help you buy your next auction property
Auction finance is frequently used to buy property at auction specifically because they can be set up so quickly, usually within 3 to 14-days, and are available for sums that range from as low as £26k up to £250m or more.
When buying property at auction, 10% of the total property price is typically required as a deposit on the day of the auction, as soon as the buyer places their winning bid. The buyer then has 28-days to complete the purchase, or they risk losing both the property and their deposit.
Traditional mortgages tend to take substantially longer to arrange than property auction finance, meaning that they are often unsuitable for this type of purchase. Auction finance, which is essentially a type of bridging loan, is therefore usually used to literally ‘bridge the gap’ between when the purchase funds are needed and the time it takes to arrange a long-term mortgage.
Once this mortgage is arranged, the buyer can use this funding to pay back the auction bridging loan.
Auction finance can be used to purchase outright properties sold at an auction. It can also be used for refurbishments/renovations which may be required to increase the value of the property prior to selling on. This model of property development is often known as flipping property.
Auction finance can be used for any property value requested and agreed with the lender. That means that the property can be a domestic or commercial property of any type. Some lenders will give preference to certain types of properties, such as those with residential purposes or investment properties.
Most auction finance lenders will finance residential properties. This includes houses, flats, bungalows and buy-to-let properties. The UK has several specialist lenders too, who will also provide finance for commercial properties, semi-commercial property and land, including both development land and agricultural.
In the UK, auction finance can be used to purchase a broad range of property types. Whether you are looking for a residential buy-to-let investment, a commercial or industrial unit or a development opportunity, a range of auction-related finance solutions can be tailored to your individual needs. These include:
Auction finance can be used to purchase both standard residential freehold or leasehold properties. Popular options for landlords and investors include houses, flats and apartments, which can usually be purchased at auction at below market value prices, through auction houses or through estate agents. The typical property purchased with auction finance will have been repossessed by a lender or inherited as part of an estate, which is often why it may be available at a significant discount or below the market value.
The advantage of using auction finance for residential property is that buyers can access finance tailored to their individual requirements, with maximum loan amount covering up to 80% of the purchase price. It is possible to achieve 100% funding with additional security in the background.
If you're intending to refurbish your residential property or commercial property then you may also obtain up to 100% of the build costs.
Commercial properties such as warehouses and shops can also be purchased with auction finance. As with residential property, the typical commercial property purchased through auction will be repossessed or inherited.
The advantage of using auction finance for commercial property is that buyers can access finance tailored to their individual requirements, with lending amounts covering up to 65% of the purchase price.
Industrial property is another popular option for those considering auction finance to fund a purchase and a heavy conversion from industrial to residential or mixed-use scheme. This includes warehousing, storage facilities, factories and workshops spread across the UK’s industrial sector, with potential buyers able to take advantage of the attractive prices often available through auctions. Yards, petrol stations, forecourts and garages are also good examples of industrial property that may come to auction. Unusual properties such as water towers that could be converted might also be purchased as auction.
For those with the skills and knowledge needed to successfully complete a development, Auction finance can also be used to purchase run-down or undesirable properties which are available at a discount. These properties can then be renovated and sold on for a higher price or converted into rental properties to generate an income.
Auction finance can therefore be used to purchase a wide range of property types in the UK, from residential and commercial properties to development opportunities.
A key factor that can affect the mortgagability of a property is its condition. For a property to be considered suitable for mortgaging, it needs to be structurally sound and in good condition, whereas auction finance is purpose-made for properties in unmortgageable condition.
If it requires substantial repairs or renovations in order to restore it to a habitable condition, banks and lenders may decide against offering a mortgage. This is the main reason are why mortgages aren't typically suited to properties bought at auction.
There are other considerations however that make auction property finance such as bridging loans a better alternative to mortgages, such as the time it takes to organise a mortgage. A mortgage cannot typically be completed within the 28-day requirement of auction houses.
When you are looking to purchase a property at auction, you're advised to be prepared by having your funds in place before the auction begins. An auction finance loan such, as a bridging loan, can be used instead of cash, allowing you to borrow the capital needed in advance of the auction.
Avoid thinking you'll be able to arrange the finance for your property purchase after placing the winning bid - instead do this ahead of the auction. It's safer. There are penalties if you're unable to complete on the property purchased via an auction, such as losing your deposit and potentially legal ramifications such as being sued but the seller. Speaking with a broker before the sale date is a smart move to ensure you're able to borrow the money you're anticipating needing to complete a purchase before sale day.
You'll also be required to provide proof that the funds are available to pay for the property before you can place a bid. This can be done by getting an ‘in principle’ auction finance loan, which gives you the promise that funds would be available for the purchase. Once approved, you’ll need to be ready to drawdown the funds within the 28-day time from the day of the auction.
Once you have secured the successful bid and the money is transferred to the seller, you’ll either need to begin making regular auction finance repayments if you've chosen a serviced interest option or if on the other hand you've chosen auction finance with an interest option of either retained or rolled-up you can defer that interest - there will be no monthly payments.
Instead you'll repay the entire loan upon the loan's term end - that is the date you've agreed to pay back the auction finance to the lender. Auction finance is typically repaid in full within 12 to 24-months through the sale of the property or the longer-term refinancing of the property by way of a traditional mortgage.
Auction finance can generally be tailored to suit the individual borrower’s requirements, with key features including:
• Short term loans with fast turnaround times between application and drawdown
• Flexible terms and conditions with loans available for periods up to 12 months
• Maximum loan amounts up to £2 million
• Interest rates from 0.85% per month depending on loan to value ratio
When looking for an auction finance loan, you will be looking to find terms that are beneficial to your needs. At a basic level, you should ensure that the loan is being provided by a reputable lender with a solid track record. There are a few other features you will want to check as well.
First, look for a loan that does not require any upfront fees. Many lenders will charge an application fee, facility fee, and a variety of other charges. Be sure to double check all applicable fees and compare them with alternative lenders.
Next is to consider the repayment terms. The auction finance should generally be payable between six to twelve months, although it's possible to have a 24-month auction finance loan. You should ensure that you are able to make the repayments within the set timescales if you've chosen a serviced interest loan, and that there are no hidden charges for repayment in advance or delays beyond the agreed repayment date. You will also want to consider the interest rate and fees associated with the auction finance. Auction finance are more expensive than mortgages because of their short-term and higher-risk nature, so it is worth researching the market to find the best deal.
Finally, you should consider the flexibility of the auction finance. You should check to see what options the lender has for extensions, extra borrowing, and the ability to convert the auction finance to a mortgage whenever you are ready to do so.
Lenders will look at a combination of factors in order to determine the borrower's eligibility for an auction finance loan, including:
- Cash you're going to put into the purchase
- Security offered by the property
- LTV (loan to value) ratio of the property
- Credit history and score
As with any loan application, you will be required to provide a range of personal information in order to make sure that you are eligible for the loan and that the loan is suitable according to your financial situation.
You will be asked to provide information about your income, employment status, credit history, and financial commitments. You will also need to provide proof of ID, such as a passport or driving license, and evidence of the source of funds you plan to use for the purchase.
If you are looking to use the auction finance for a property located in the UK, you will also need to provide proof of address and the property address you intend to bid on.
The interest rate on an auction finance loan varies from lender to lender. Generally, the interest rate is higher than those offered for a conventional mortgage. This is because the loan is unsecured and more risky. Interest rates will also be affected by a range of factors, such as your credit history and financial commitments.
Yes. Auction finance is often a much faster process than applying for a conventional mortgage. As there is minimal paperwork and no need for a survey, the loan can often be approved and funds available within a few days. This makes it ideal for those looking to secure a property quickly.
The value of the auction finance is primarily based on how much you want to borrow, the value of the property and how much of a deposit you have available. Generally, lenders will require a loan value of at least 50-80% of the property’s value.
This means that you should always have either substantial equity in another property you're intending to use a security for the auction finance or a substantial cash amount to put towards the purchase in order to secure the loan.
Borrowing 100% of your auction purchase price is possible, however, you’d need to offer additional security over additional property or properties to achieve this.
In order to apply for auction finance, you will need to contact a reputable broker or lender who specialises in auction finance. They will provide you with an application form and complete any of the necessary paperwork. It is important to answer all the questions accurately and to provide as much evidence as possible proving your financial capabilities.
You basically have two alternatives when it comes to sourcing and securing auction finance in the UK. Either you go to a auction finance broker or you go to a auction finance lender. Both have merits.
A broker is likely to be able to package up your unique circumstances and requirements into a more palatable deal for a lender. An auction finance broker will also likely know several competitive lenders who would like the deal they have so are able to negotiate a better rate on the the clients behalf. Whilst brokers fees increase the cost to the borrower, they can pay for themselves through the fact an auction finance broker can source the borrower a better deal for their loan.
Additionally, auction finance brokers tend to know more lenders then those well-known names, for example some brokers have access to private investors and family offices who also like to lend to those who specifically buy property at auction.
Going direct to a auction finance lender will likely mean you avoid paying the broker fees, however you may also be limited to fewer lenders and therefore end up paying a higher interest rate for your auction finance.
If you are looking to purchase a property at auction, you may want to consider other financing options. These could include taking out a mortgage, remortgaging your existing property, or drawing on a cash reserve. Each option has its own advantages and disadvantages and should be assessed on its own merits.
Buying a property at auction comes with a range of benefits. Firstly, you are likely to acquire the property at a discounted rate, that is to say it will be below market value. This could help you to increase your potential of earning a profit on the property.
You also benefit from increased speed and certainty when it comes to the purchase. Unlike conventional real estate purchases, when you buy a property at auction your bid is legally binding. This eliminates the risk of the seller withdrawing the property from the market or another buyer making a last-minute offer.
Lastly, if you are looking to purchase a property requiring a lot of renovation, buying at auction can save you time and money. As you make your bid, you will have the opportunity to view the property prior to the auction taking place, allowing you to assess its condition before making a commitment.
Eligibility for an auction finance loan will depend on a number of criteria. Lenders for auction finance typically care more about the property security and the LTV then they do about the best credit history. Some lenders will have eligibility requirements that include your credit score, employment status, current financial commitments, and income - others will not. Speaking with an auction finance broker first can help you better understand how to approach seeking the finance your require.
An exit strategy is the strategy that investor uses to extricate themselves from their loan. It's important for any individual or businesses to plan and understand potential exit strategies from an auction finance agreement to ensure they can pay back the loan on time and to their benefit. The most common exit strategies for auction finance are:
Pay it Off: One of the more straightforward ways of exiting an auction finance agreement is to pay off the loan in full. Depending on the size of the loan, this could be more cost-effective than taking a loss, even if the investment's worth has decreased.
Early Exit: This exit strategy allows for businesses to pay the loan off early, with the risk of incurring an early exit fee. This works best when the auction finance lender refuses to extend the loan. By paying back the loan early, businesses can limit the amount of interest they pay and have more financial flexibility.
Re-financing: Another common exit strategy is to refinance the auction property loan. This involves a business finding a more favourable loan agreement with a different lender or finance company. This would generally result in a lower interest rate without needing to pay the full amount off all at once.
Asset Sale: In cases where the value of investments and goods reduces over time (sometimes beyond their original cost), it may be worthwhile to sell them in order to raise money to pay back the auction finance loan.
Bankruptcy: As a last resort, businesses can declare bankruptcy in order to have their debts discharged. However, this option is clearly not ideal as it is likely to negatively impact credit scores and reputation down the road. For stating the obvious, this is also not an option going into a property auction finance agreement.
Understanding the available exit strategies for an auction finance agreement is key for businesses looking for a credible alternative source of financing. Having a plan in place to pay back the loan on time will not only save businesses money, but also offer repayment flexibility and financial security.
Here's our mini-guide for auction finance first-timers, a quick cheat sheet for you to make sure you don't mis-step.
Research properties and auctioneers in the area you want to buy
Arrange viewings and ask questions
Is the purpose for which the property is used in keeping with other property in the area?
Have you received a copy of the legal pack?
You need to make your decisions fast
Ask to be kept informed
Know your budget and stick to it
Never sign anything until you've read it
Arrange your property auction finance early
Do your research of auctioneers located in the close proximity to the area you intend to buy your property in. Local auctioneers should better know the local markets and care for their reputation in that area.
For sourcing commercial property opportunities you might want to try reading industry property journals such as Estates Gazette which publishes regular surveys of different areas and industry sectors, or contact local businesses and organisations, such as Chambers of Commerce or Business Link to ask advice on where to buy.
When you've narrowed your selection down next make sure any auction houses you're considering are legitimate businesses. A quick check on companies house should suffice.
Check their track record for selling properties at auction by searching the internet, Google reviews are a good starting place, or Googling the auctioneer's name + "Bad Reviews" should return reviews from anyone who has previously had an issue with them.
If there are no reviews then that might be a red flag as its unusual a large company has zero reviews. If at all possible its also worthwhile speaking to other people who have bought from them before, and an easy way to do this is by contacting a couple of local estate agents to get their view or again search the internet for the auctioneer's name + "forum".
Once you've identified one or more properties that interest you its important that you physically view them. Sounds obvious but we often hear of people getting swept up at auction, often due to them not being able to secure the property they originally went to auction for and bidding on another property simply so they didn't 'miss out'.
If you get the urge to randomly bid then that should be a red flag, remember that few serious investors risk hundreds or thousands of pounds on a nothing more than a whim. If you don't have any construction or trade experience, aim to take someone who does with you.
If you'd like to view a comprehensive property checklist that lenders consider before lending against a property you can find one here. If a lender judges a property's suitability from this list then perhaps its worthwhile you considering the same list before seeking auction finance?
Aside from the condition the property visiting a property allows you to get a wider perspective of the neighbourhood and its general location to amenities and potential issues. Here's a list of questions to ask yourself:
Is the property sited near or next to:
- a major trunk road, dual carriage way or motorway
- rivers, flood plains, water courses etc.
- an existing or historical mining area
- landfill or recycling centres
- sewage treatment centres
- railway lines
- large overhead electrical suspension, tension or transmission towers (commonly, but incorrectly, referred to as Pylons)
- large capacity stadium
- university, college campus or large school
So, for example, is the street mainly commercial but the property you wish to buy is residential then that may harm the property's rentability or saleability if you default on your loan and the lender repossess it. When you start thinking like a lender it can help you spot potential pitfalls, which in the long run will cost you money.
Don't assume there aren't any covenants on the property you're intending to bid on at auction.
Its not uncommon that a residential property with a large plot comes with a not so well documented covenant restricting future development of the property and / or adjacent land.
When in doubt, consider asking a solicitor to review the legal pack that comes with every property, and do so before the day of auction. Auctioneers are likely to have a limited version of 'property particulars' for the properties being sold at auction, remember those packs are generally collated by the sellers and its your responsibility to ensure you know what you're buying.
If you've identified your opportunity, completed your research and are ready to commit to a property then be prepared to move fast. There's usually only a month between property particulars being published to the day of the auction, so you need to have your game plan ready before that auction day arrives.
Changes to the lots for sale and indeed the sale particulars change, when this happens its known as an Addendum. Its a good idea to keep abreast of these changes so you're not caught off-guard on auction day. To do so simply speak with your auctioneer and ask to be kept up-to-date on a particular lot and to be sent its latest auction sales particulars.
Your auction finance is likely to be a finite sum of money, and that'll be for the purchase of your property at auction and any works.
If you're also factoring in works to the property such as light refurbishment or heavy development then you need to stay on top of your finances. With "two in 5 renovators overshooting their budget by an average of 20% – Hiscox", and with the average cost of materials for repair and maintenance work rising at 25.5% for the year to September 2021, its easy to see how costs can spiral.
So plan a contingency on your works and avoid eating into it to simply increase your purchase price.
Auction house's T&C's are there to protect the auction house - not you. By signing their terms of sale you are agreeing to abide by them. Never sign your name to anything without reading and understanding the agreement you are entering in to. If you read it and are still unsure of any points always seek legal advice.
With over 120 main stream lenders, and another 180 bridging loan companies in the UK, you'd think that finding a lender for auction finance lender shouldn't be difficult?
Its not always the case - so give yourself time and line up your auction finance loan in advance. Lending decisions for auction property purchases are dependent on several factors, but mainly its whether or not you can be entrusted with the funds and whether your exit is viable.
Examples of successful auction purchases for residential properties and development plots.
Capital Raised: 63000Location: Birmingham
Capital Raised: £150,000Location: Bournemouth
Capital Raised: £460,000Location: Wiltshire
When you want reliable, fast UK auction finance - we can help.
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Call our friendly team on 01202 612934, we're ready to help.