01206 544333

Auction Finance

Key Features

Buying a property at auction can be very exciting and has the potential to be very profitable. It avoids all the usual lengthy procedures that a normal purchase involves. And there’s less risk and disappointment of everything falling through at the last minute. At auction, as soon as the hammer falls, the property is yours. For that reason, you need to have arranged your auction financing in advance.

On the day of the auction, you need a 10% deposit, providing the other 90% within 28 days so you’ll need to have a mortgage in principle from a lender, before the day. If you need financing for auction property, it’s essential you speak to an experienced and specialised broker who knows the market.

We have arranged financing for auction property for many customers looking for auction financing and have expertise in financing for auction property. With this in mind, we wanted to explain the areas customers need to be wary of, as well as knowing where the best deals are.

When arranging a mortgage for an auction property, there are several areas that need to be very carefully considered.

  • Broker fees. Some mortgage brokers can charge pretty hefty fees.
  • Lenders arrangement fees. These can vary significantly and need to be carefully reviewed. In some cases there may not be a fee, but the minimum term is longer.
  • Interest rates. Some lenders charge an ‘introductory’ interest rate, which can be as low as 0.75% but which doubles after 6 months. Or, the interest rate may be 0.75% but there is also a management fee of 0.75% making the true cost 1.5%.
  • Exit fees. Lenders charge interest by a daily or monthly basis. This means should you wish to come out of the deal, the fees are considerably more than going with a lender that charges interest on a daily basis.
  • Minimum terms. What is the minimum term? With some lenders, it’s 3 months.

When the hammer strikes you have effectively exchanged contracts so it is important that you have had your solicitor look through the contract.

In terms of the property it needs to be suitable security for a lender so ask your solicitor to check this and also if there are any structural issues with the property. 

Further Information You May Find Useful