Bridging loans for buying at an auction sale

One of the most common uses of a bridging loan is for a client buying a property at an auction. This type of loan has many other uses for example securing a new property before the sale of the existing property has been completed.

Unfortunately over the last two years the number of house repossessions coming on the market via auctions has increased, these can offer a potential new buyer very good investment opportunities. A large number of these properties are put up for auction by the mortgage lender and can sell for less than the true market value.

A great many investors are finding it very difficult to fund these purchases from mainstream lenders, even more so in recent years. Mainstream lenders require surveys and approving any renovation plans the client may have. Purchasing at an auction normally means exchanging contracts on the day and completing within the next 28 days. A mainstream lender will normally take much longer than 28 days to release funds for the purchase.

Bridging loans are different as funds can be authorised very quickly giving the client breathing space especially if renovation work is required on the new purchase.

This type of funding also gives potential bidders at an auction the peace of mind the funding is in place to complete the transaction on time.

Please always remember a bridging finance lender will always want to see a firm repayment structure in place for any loan.