Auction Finance in Barnes
Contact UsJPM Residential helps property investors, landlords and developers arrange auction finance in Barnes.
Auction finance provides short-term funding to help buyers complete property purchases within the deadlines set by auction houses. It can be used for residential, buy to let, commercial and refurbishment properties, including properties that may not currently qualify for a standard mortgage.
Whether you are an experienced property investor or buying at auction for the first time, we can help you find suitable finance for your purchase.
What is Auction Finance?
Auction finance is short-term property finance used to fund the purchase of property bought at auction.
Property auctions in Barnes usually require buyers to pay a deposit when the auction ends and complete the purchase within a specified timeframe. Auction finance can provide the remaining funds when a conventional mortgage cannot be arranged quickly enough or the property is not currently mortgageable.
Bridging loans are commonly used for auction purchases because they can be arranged more quickly than many traditional property finance products.
JPM Residential can help you arrange auction finance based on the property, amount required and your proposed exit strategy.
What Types of Auction Finance are Available?
Different types of short-term finance can be used to fund an auction property purchase depending on the property and your plans after completion.
Options can include:
Auction Bridging Loans: Short-term finance used to complete an auction property purchase within the required timeframe.
Buy to Let Auction Finance: Finance for auction properties that will ultimately be rented to tenants.
Refurbishment Finance: Short-term funding for properties requiring improvement before they can be sold or refinanced.
Commercial Auction Finance: Finance for commercial properties purchased at auction.
Residential Auction Finance: Short-term funding for residential properties purchased through property auctions.
The right finance will depend on the property, purchase price, available deposit, proposed use and exit strategy.
What Properties can Auction Finance be Used For?
Auction finance in Barnes can be used for a wide range of properties purchased through auction.
These can include:
Residential houses
Flats and apartments
Buy to let properties
Commercial property
Mixed-use property
Unmortgageable properties
Land
Properties requiring conversion
Some properties may require specialist lenders depending on their condition, construction, intended use or legal circumstances.
JPM Residential can assess the property before you bid and help identify suitable auction finance options.
Who can get Auction Finance?
Auction finance is available to a range of property buyers in Barnes, subject to lender criteria.
We can help clients including:
Landlords
Property developers
Limited companies
SPVs
First-time auction buyers
Experienced auction investors
Lenders will typically consider the property, purchase price, available deposit or equity, loan-to-value ratio and your proposed exit strategy.
Contact JPM Residential to discuss your proposed auction purchase and the finance options that may be available.
How Much can I Borrow with Auction Finance?
The amount you can borrow with auction finance depends on the property value, purchase price, available deposit or equity and lender criteria.
Auction finance in Barnes is commonly arranged using a bridging loan, with the maximum borrowing determined by the lender's loan-to-value requirements.
The lender will also consider how the finance will be repaid, particularly if your exit strategy involves selling the property or refinancing onto a longer-term mortgage.
JPM Residential can review the auction property and your circumstances to help establish how much you may be able to borrow before you bid.
How Much Deposit do I Need for Auction Finance?
A deposit of around 25% to 30% of the property value may be required for auction bridging finance, although requirements vary between lenders and properties.
Auction houses also commonly require a deposit when the property is purchased, often around 10% of the purchase price. This is separate from the overall deposit or equity requirement of the finance provider.
The amount you need will depend on the property value, purchase price, loan-to-value ratio and lender criteria.
It is important to establish your funding requirements before bidding because winning an auction can create a legally binding commitment to purchase the property.
How Much does Auction Finance Cost?
Auction finance interest rates in Barnes are typically around 0.5% to 1.5% per month when short-term bridging finance is used, although the rate available will depend on the property, loan-to-value ratio and borrower circumstances.
Additional costs can include:
Lender arrangement fees
Property valuation fees
Legal fees
Broker fees where applicable
Exit fees where charged by the lender
Arrangement fees can commonly be around 1% to 2% of the loan amount, depending on the lender and product.
Because auction finance is usually short-term, the total cost will also depend on how quickly you repay or refinance the loan.
Contact JPM Residential to compare auction finance rates and costs for your proposed purchase.
How does Auction Finance Work?
Auction finance provides short-term funding to complete a property purchase within the deadline specified by the auction house.
The process normally involves the following stages:
Initial Assessment: We discuss the auction property, guide price, deposit, amount required and proposed exit strategy.
Finance Search: Suitable lenders and auction finance products are identified based on your requirements.
Agreement in Principle: An indication of potential borrowing may be obtained before you bid, subject to the lender's full assessment.
Auction Purchase: If your bid is successful, you pay the required auction deposit and become committed to completing the purchase under the auction terms.
Valuation: The lender may arrange a valuation of the property.
Legal Work: Solicitors complete the necessary legal checks and lending documentation.
Loan Offer: The lender issues the formal finance offer once its requirements have been satisfied.
Completion: Funds are released to complete the property purchase.
Repayment: The auction finance is repaid through your agreed exit strategy.
JPM Residential can help you arrange auction finance and manage the application through to completion.
How Long does Auction Finance Take?
Auction finance can typically be arranged within 1 to 2 weeks, although straightforward applications may complete sooner.
The exact timescale depends on the lender, property valuation, legal work, property circumstances and how quickly the required information is provided.
Auction purchases in Barnes often have strict completion deadlines, so it is advisable to investigate finance before bidding rather than waiting until you have won the property.
JPM Residential can help you assess your finance options before the auction and progress the application quickly if your bid is successful.
Frequently Asked Questions
Can I Arrange Auction Finance Before I Bid?
Yes. You can investigate auction finance and potentially obtain an agreement in principle before bidding on a property.
This can help you understand how much you may be able to borrow and the deposit you are likely to require.
Can I get Auction Finance for an Unmortgageable Property?
Yes. Auction finance can be used to purchase properties that do not currently meet the requirements of conventional mortgage lenders.
You may be able to refurbish or improve the property before selling it or refinancing onto longer-term finance.
Can I use Auction Finance for a Buy to Let Property?
Yes. Auction finance can be used to purchase a property that you intend to rent to tenants.
A common exit strategy is to refinance the auction bridging loan onto a buy to let mortgage once the property meets the lender's requirements.
Can I get Auction Finance for a Property that Needs Refurbishment?
Yes. Short-term auction finance can be used to purchase properties requiring refurbishment.
Depending on the lender and scale of the project, finance may be available for the purchase and potentially some of the refurbishment costs.
Can a Limited Company get Auction Finance?
Yes. Limited companies and SPVs can apply for auction finance, subject to lender criteria.
The lender may consider the company, directors, property, available deposit or equity and proposed exit strategy.
What Happens if I Cannot Complete an Auction Purchase on Time?
Failing to complete an auction purchase within the contractual deadline can have serious financial consequences.
Depending on the auction terms, you could lose your deposit and potentially face additional costs or legal action. For this reason, it is important to understand your finance options and the auction's conditions before bidding.
Get In Touch
JPM Residential can help you arrange auction finance for residential, buy to let, commercial and refurbishment properties in Barnes.
Whether you are preparing to bid or have already secured a property at auction, contact us to discuss the short-term property finance options available.
We cover Barnes (Greater London)