Purchasing auction property using bridging finance

In the current housing market many properties are not achieving their desired sale price, this has resulted in a greater proportion of commercial and residential property being sold through auction houses.

It is for this reason that Auctions are an increasingly popular route for investors to find property bargains for both long term letting investments and small property developments. Very often properties offered at auction are in need of attention and have therefore failed in traditional methods of sale due to mortgage lenders criteria. This gives the hands-on investor an opportunity to buy inexpensively and carry out an immediate refurbishment before renting or selling the property.

When buying a property, bridging finance allows you to bid with confidence, knowing that you will be able make the purchase within 28 days. Auctions usually require you to pay 10% deposit for the purchase immediately and pay the remaining balance within 28 days. If you are in a position where you have yet to sell your property, then you will not have all the money you need and without bridging loans would be forced to make the sale within the given time period. This may mean that you have to accept an offer which you know is well below the true value of the property in order not to default on your auction purchase.