Bridging loans and property finance for property auctions
Property finance is a type of bridging finance. When the hammer falls at the auction, you have effectively exchanged contracts, with completion following between 10 and 20 working days thereafter.
This is not enough time for most mainstream lenders to arrange completion funds, so unless you are a cash buyer you will require a Bridging Loan.
However, since it is for a specific short-term purpose, interest rates can be higher than traditional term loans.
You should obtain an Agreement in Principle from the lender prior to the auction so that you know how much the lender is willing to lend you if you overstretch. If you cannot obtain funding, you may lose the 10% deposit you will be required to pay on the exchange of contracts.
For more information about buying or selling at auction please visit our YouTube channel or watch an interview that Managing Partner Nick did with Ranjan Bhattacharya.
*The timescales quoted do not include weekends.