Fast Auction Finance Loans

Auction finance is a type of bridging loan which allows you to buy a property at an auction and complete within the 28 day deadline. 

When you finally win that dream property at auction, you will be required to pay a 10% deposit of the property value straight away. You will then have 28 days to come up with the remaining 90% deposit to complete the purchase. 

Auction finance is mostly used by property developers and investors (and some homeowners) for both residential and commercial property, whether it is a residential home, warehouse facility, office block or anything in between.

The idea is that they can secure a discounted rate on a property and a very fast completion to own the property or maybe fix it up and sell it for a profit at a later date.

At Blue Square Capital, we have a superb track record of working with developers and investors who have successfully acquired properties at auction. 

As auction finance lenders, our ability to make quick decisions using automated valuations and established processes can allow you to get all your funding requirements in place beforehand – so you know exactly how much you can bid for and what your margins will look like.

Once you have successfully won the property at auction, we can distribute funds extremely fast and often complete within 2 weeks, which will be well ahead of your 28-day deadline.

Our professional team of bridging advisors are on hand to assist you with your requirements and offer strong feedback and advice.

Auction finance allows you to prepare your funding requirements ahead of time and before the auction takes place.

Auction houses will typically have a list of properties in their catalogue and have upcoming auctions on scheduled dates.

If there is a property that you like, you can often visit the physical location and arrange all your funding requirements in advance.

You will require a 10% deposit on the day the hammer falls and pay this to the auction house and very often this is savings or capital that the buyer has available on hand.

The remaining 90% of the property must be funded within 28 days of the auction purchase and you can use a bridging loan to cover in the region of 70% of this amount.

The property in question is used as security and the loan term is usually around 12 months to repay the auction finance loan in full or refinance under new terms.

• Residential investments, including HMOs and multi-lets
• House purchases for households and homeowners
• Semi-commercial property
• Commercial property 
• Warehouses
• Land
• Garages
• Hotels
• Leisure facilities
• Offices
• Student accommodation

Pros

Fast Turnaround – Auction finance allows for quick completion since you can win a bid and complete on the deal in 28 days since this is the deadline.

Greater Transparency – When attending an auction, you can see and hear other bidders around you, create excellent transparency when compared to buying a typical property and only hearing offers through agents.

Potential Discount – Properties at auction start at rates below the market, with a view that they will increase. 

Streamlined Process – You can bid on a property by email, phone or in person making the process much quicker than an average purchase.

Cons

Avoid Overpaying- It is key to know your numbers before you start bidding or the other bids can quickly drive up the price and you can find yourself overpaying. 

10% is Required Upfront – For some buyers, they may not have 10% available on the day of winning the bid to secure the purchase. This could be a little higher if the price is inflated on the day. Having this sum and a little more available is key.

28-Day Deadline In Place – Be sure that you can produce the remaining 90% by the end of the 28-day deadline or you risk losing the property and your 10% deposit.

Security Is At Risk – As with any secured loan, your property is at risk of repossession. You typically have up to 12 months to repay the auction finance loan in full or to refinance it. If you struggle to repay and have cash flow issues, your property can be at risk of repossession. 

We require all applicants to have a clear strategy and exit plan with the property they wish to purchase. Any proposed plans and costs will certainly help your application, in terms of building costs, application fees, solicitor fees, stamp duty and more.

As an unregulated lender, we are always interested to hear your plans for the property and its potential value.

We handle every customer enquiry on a case-by-case basis and being an independent private bridging loans lender allows us to take a view on all personal circumstances and backgrounds. 

Blue Square Capital offers rates starting from 0.95% per month which remains fixed through the loan term of up to 15 months.

Other costs to be aware of include:

• Arrangement fees (2% of loan amount)
• Bank transfer fee (£25)
• Admin fee (£999)
• Valuation and survey fees (depends on property)
• Solicitor fees (depends on project)
• Exit fees (n/a)

Is Auction Finance Right For Me?

Auction finance can be an extremely effective way to buy property at discounted rates or finding niche properties that have become available by probate or have been unable to sell. The fast turnaround can also be very scalable for budding property developers.

It is essential to do your homework and understand the property and any potential challenges that you may face. Making sure that you know exactly how much you can bid to make it profitable and avoid going over budget is key.

Is It Cheaper To Buy a House Through An Auction?

Yes, sometimes. Properties sold at auction houses usually start around 20% lower than they would in the regular market, with a view that the bids will drive up the price. If you do your homework and time it well, there are good deals to be made.

How Much Deposit Do I Need To Buy For Auction Finance?

You require a 10% deposit on the day that you win the auction bid and you must pay this to the auction house to secure the property. Blue Square Capital will not fund this initial 10%, this typically comes from savings or available capital that the investor has.

Should I Apply For Auction Finance Before Winning The Bid?

Yes, you should get a good indication of numbers, valuations and what you can afford to bid. So if you do eventually win, you will have all your details already added with Blue Square Capital and we can simply get everything ready for funding.

Can I Get 100% Auction Finance?

Typically, because auction finance is a bridging loan, you will only be able to borrow around 70% LTV towards your property.

Can I Refinance My Auction Purchase With Blue Square Capital?

Yes of course, with auction finance loans lasting up to 15 months, you may wish to refinance under new terms.