Short term property auction finance explained

What is property auction finance?

Auction finance is a type of short term property loan. It’s specifically designed to be fast and simple in order to deliver for auction purchases, which usually have to complete within 28 days of the auction or the transaction collapses and the 10% deposit is forfeit.

Auction finance loans are usually 12 months long and they ‘bridge’ the gap between the date of the auction purchase and the loan exit. The exit for our loans are usually either a longer term buy to let or commercial mortgage, or the sale of the property. 

How does auction finance differ from other bridging loans?

Some lenders have separate short term property auction finance products. At Funding 365, you can use any of our bridging products for auction purchases. All of our bridging loans are designed to be fast and simple and our highly competitive interest rates start at just 0.64% per month.

You can view all of our bridging products here.

Which types of properties do we provide auction finance for?

We lend against residential investment, commercial and semi-commercial properties. We can also provide extra funding in our loans for refurbishment of the properties, if needed.

When should you get in touch with us?

You can ask us for terms before or after an auction.

Having lender terms before an auction will give you bidding confidence. There is no downside to asking us for terms before an auction as we don’t charge admin fees.

The only fees that we charge are a 2% arrangement fee and legal and valuation fees at market rate. The first fee that you would need to pay is the valuation fee, which is only charged once you’ve confirmed that the loan is going ahead.

How quickly can we deliver auction finance?

Our funding is principal-led, which means that we’re in charge of our credit and we can release funds without any delay. We’ve never missed an auction finance deadline.

Here are a few tips to ensure that your property auction purchase completes before the deadline:

1.   Choose solicitors who are experts in auction finance. Bridging loans are often slowed down by lawyers who are inexperienced in the speed requirements and bespoke nature of short term property finance.

2.   Ask if your loan would qualify for an automated valuation model (AVM) valuation. This is an online valuation which can be sourced by our underwriters from their desks. AVMs are significantly quicker (and cheaper) to source than Red Book valuations (where a valuer physically inspects a property and writes a report). However, AVMs are only available for residential properties and we require that the property has a Hometrack confidence score of 5 or higher. In practice, this is mainly properties in areas where a large number of similar properties have sold recently, so they are often properties in towns and cities. You can find out more about our AVM Bridge here.

3.   Choose a responsive lender with a strong service track record. Our decision-making underwriters always answer the phone and they aim to provide bespoke terms within just one hour. We have won a number of industry awards for our service and have a 100% 5 star rating on both Google and Trustpilot.