An ideal Auction Finance strategy is one that allows an individual to go to auction in the same position as a cash buyer. Although there are a variety of ways in which to achieve this, arranging a mortgage on an unpurchased property is not the most economical method – the cost of arranging this kind of financing will be all for naught if an individual is not the highest bidder on auction day.
It is always best to consult a finance broker to determine which method is the best fit for an individual’s unique financial situation and our recommended team of professionals can help an individual do just that.
How to Fund Auction Finance
When securing funds for auction financer, IFAs and Mortgage Advisors are rarely the right organizations to work with for this situation. Our company strongly recommends seeking out and researching alternate methods for auction finance and enlisting the help and guidance of an experienced finance broker who specialized in the auction industry.
Even if an individual has the cash to purchase the property up front, it is best to work with a broker to pave the way for financing after the property is purchased – many mortgage brokers will not extend financing within six months of purchase.
Additionally, it is important to recognize that many auction houses will expect at least a 10 percent deposit on the property purchase right then and there. Because of this, it is vitally important to have financing in place prior to the auction in order to guarantee the ability to make this deposit.
The remainder of the price of the property is usually expected to be paid between two weeks to 28 days after the sale – this small payment window is just another reason to have the support of an experienced Auction Finance Broker and proper financing in place before going to auction to purchase any type of property.
Financing for Multiple Property Purchases
Some individuals purchase multiple properties at one time when the deals are available. In this case, it may be beneficial to seek further financial advances or re-mortgaging once the value of the property has been increased – this is especially true if the property is selling for significantly more than its original purchase price.
This helps to release deposits tied up in the properties, freeing funding to continue purchasing. It is important to remember, however, that re-mortgaging can only be completed after the property has been owned for a period of six months and it may be pertinent to consider other forms of financing such as bridging loans.
The Need For Accreditation…
All the organizations that make up our team of commercial brokers are members of the NACFB or National Association of Commercial Finance Brokers. These entities hold Professional Indemnity Insurance and align themselves with the NACFB Code of Practice through the Office of Fair Trading. Because of this, it can only benefit individuals looking for Auction Finance to work with this group of brokers in order to secure the finance they need for their purchases.
If you need more information or would like to speak to one of our knowledgeable representative, please call 0292 108 0713.