Property auctions and bridging loans

Blogs

Property auctions and bridging loans

Property auctions and bridging loans are a mainstay for investors and individuals looking to purchase real estate. Auctions are now considered an alternative way of making a property purchase. One of the key reasons for this is that property can often be purchased below market price. In addition to this, the speed of completion is frequently faster than the traditional market. And for this reason, your finances should be in place to act fast.

In most property auctions, you will be required to pay an initial 10% deposit of the final selling price. Following this, you will be obliged to pay the remained of the balance within 28 days. Failure to meet this deadline can often result in forfeit of the initial deposit. A bridging loan could be used to make sure funding is in place prior to auction.

Using bridging loans in property auctions

One way that people looking to purchase property organise their finances in advance is with a bridging loan. This type of loan has multiple advantages for both investors and individuals:

  • Loans can be agreed and completed within days
  • Borrow between £50,000 and £10,000,000
  • Adverse credit, CCJs and arrears can be accepted
  • No personal guarantors required

In addition to the benefits above, terms for a bridging loan can be agreed before the auction takes place. It can take just a matter of hours for terms to be agreed following an initial enquiry. This allows you to go into auction knowing how much you can comfortably bid for a new property.

Overcoming behavioural finance decision making

Behavioural finance biases can be commonplace in the auction hall. With the excitement of the bidding, investors can often get caught in the moment and stretch beyond their means. Having terms agreed for a bridging loan in place before the auction takes place can prevent this from happening as already have an upper limit on paper.

Another ideal method of preparation before an auction is to attend one prior to the one you wish to make a purchase in. This is useful to understand the emotional roller coaster of the event and learn how the fast pace of an auction can move.

It is also very useful to do your research on a property and its surrounding area in advance. Many investment properties can seem ideal on paper, but closer inspection can reveal issues that only a viewing might reveal.

Conclusion

Property auctions are very popular due to their speed and their ability to produce a bargain. Investors can take advantage of these features by securing a bridging loan in advance of the property auction. Having terms agreed prior to action lets investors complete fast and not go over their monetary limits.

To get more information on bridging loans or to make an enquiry, call MT Finance on 0203 051 2331 or fill out this  contact form and a team member will call you back.

quick enquiry

call us on: 0203 051 2331

enquiries@mt-finance.com