Each year, thousands of properties are sold at auction. Regular buyers and property developers can reap the benefits of buying property this way.
Often, you’ll be able to purchase at a discount and you’ll face less competition to buy than you would in an open market.
Auction finance is ideal for those looking to buy a property for below-market rates, in a short space of time. If you’re a property developer, every pound you save will make a difference to your returns so buying at the right price is crucial.
Is Auction Finance Right For You?
There are a number of reasons that you might need to arrange auction finance to buy a property. Your capital may be tied up in other projects or properties or you want to step up to higher-value properties.
Although inexperience is not necessarily a bar to receiving finance, everyone has to start somewhere, a good track record can go a long way to persuading lenders that you are low risk.
The Risks Of Buying At Auction
Buying at auction can pose more risks than going down the traditional route. The timescales are often quicker, leaving less time to carry out any due diligence.
Often, properties are unable to be inspected before the hammer falls. This is why it is often more experienced property developers who buy in this way.
Auction Finance From CS Mortgage Solutions
At CS Mortgage Solutions, we want to make it easy for you to step into the auction room with confidence by arranging your finance options in advance.
Decide what types of properties you’d like to purchase and from which areas. Then produce a shortlist of potential properties from that auction and present this information to potential lenders.
Provisional Acceptance Criteria
Lenders will have their own pre-approval processes to go through which can take some time. As we’ve already mentioned, the timetable for buying auction properties is considerably shortened compared to a traditional sale.
This process can include:
- Credit checks
- Affordability assessments
- Property valuations
The process tends to move faster for experienced property developers but don’t let that put you off if you’re a newcomer. If you have a solid, well researched and practical proposal, then lenders will still be able to accommodate you.
Choosing Auction Properties
Your provisional approval from a lender will be conditional on you purchasing a particular type of property (e.g. a two-bedroom flat) within a certain price range.
After Your Winning Bid
If you’re successful at auction you’ll need to put down a deposit. This is usually 20%. From there, you’ll have 28 days to pay of the remainder of the balance of the property, which is paid by the lender who has agreed to your auction finance.
From there, it’s just a case of keeping on top of the legal work and keeping the lines of communication open with the seller and their legal representatives.
If you would like to discuss your options for auction finance or arrange a mortgage or remortgage, contact CS Mortgage Solutions now.