Is Property Auction Finance Right for Your Client?

Property auctions can be a fantastic opportunity for buyers looking for competitive prices and quick transactions. But is property auction finance the right choice for your client? Let’s explore how short-term finance solutions can support auction purchases and when they might be the best fit.

What is Property Auction Finance?

Property Auction Finance is a type of short-term funding designed to help buyers complete their purchase within the typical 28-day auction deadline. Unlike traditional mortgages, which can take weeks or even months to process, auction finance provides fast, flexible funding to ensure buyers don’t miss out on opportunities.

Key benefits include:

• Fast approval and funding
• High loan-to-value (LTV) ratios
• Flexible lending criteria
• Available for a variety of property types, including commercial and residential

When Would Property Auction Finance be Recommended?

Buying a property at auction requires careful planning and fast access to funds. Property Auction Finance may be suitable for clients who:

• Need to complete quickly: Auction purchases typically require completion within 28 days.
• Have a deposit but need additional funding: Buyers must pay a deposit on auction day, with the remaining balance due soon after.
• Are purchasing a non-standard property: Traditional mortgage lenders may not finance properties in need of renovation or those with legal complexities.
• Require short-term funding: Auction finance can bridge the gap until long-term funding is secured.

The Benefits of Short-Term Auction Finance

Short-term finance solutions can be the perfect option for clients purchasing at auction. Here’s why:

• Speed: Funds are made available quickly to meet tight auction deadlines.
• Flexibility: Lenders assess each case individually, offering tailored lending solutions.
• Increased borrowing power: Clients can bid confidently, knowing they have finance in place.
• Clear bidding process: Buyers know exactly what they can afford before entering an auction.
• Expert support: Specialist lenders like Alternative Bridging Corporation offer guidance throughout the process.

How Alternative Bridging’s Alternative Overdraft Can Help

For buyers needing a flexible and accessible funding solution, Alternative Bridging Corporation offers an Alternative Overdraft. Unlike traditional auction finance, this product provides a pre-agreed credit facility that can be drawn upon as needed, making it particularly useful for clients who require:

• Immediate access to funds for auction purchases
• A flexible short-term lending facility
• A streamlined approach to securing property quickly
• An alternative to traditional bridging loans. Learn more about our Alternative Overdraft here.

Example: Buying a house at auction with short-term finance

One of our clients recently secured a three-bedroom house at auction with a winning bid of £250,000. They had a 10% deposit but needed the remaining funds quickly.

Using Alternative Bridging Corporation’s Alternative Overdraft, they were able to:

• Access funds within 10 days
• Complete the purchase within the 28-day deadline
• Arrange long-term finance after acquiring the property

This allowed them to renovate and refinance the property, maximising its value and investment potential.

Checklist: Is Property Auction Finance Right for Your Client?

Before recommending auction finance, ensure your client considers the following:

• Have they secured an agreement in principle (AIP)?
• Do they have a deposit ready?
• Is their chosen property mortgageable, or will they need specialist finance?
• Can they repay or refinance within the loan term?
• Have they factored in additional costs such as legal fees and stamp duty?

Final Thoughts

For brokers, having the right short-term finance solution can help clients secure auction properties quickly and efficiently. Whether your client is an investor, a first-time buyer, or looking to expand their portfolio, Alternative Bridging Corporation’s Alternative Overdraft provides the speed and flexibility they need.

If you’re a broker looking for auction finance solutions, contact our team today to discuss how we can support your client’s next purchase.