FAQs: Bridging Loans for Auctions

Why should I use CA for my Auction Finance?

Personal Service—CA has been funding auction purchases since 1983. We are dedicated property lenders specialising in short-term bridging finance, development finance and refurbishment finance. We are wholly owned by leading UK merchant bank group, Close Brothers. our expert lending teams support established and experienced residential and commercial property traders developers and investors. We build relationships and pride ourselves on our customer service. You will be assigned an experienced and dedicated Lending Manager to handle your requirement from initial enquiry through to repayment of the loan.

Fast Tailored Decisions—Your application will be reviewed and if it satisfies our criteria, CA aims to provide a decision in principle the same day as receiving your enquiry. CA’s rates and fees are competitive in the market and will be outlined within the Heads of Terms when issued.

Security for the loan—the loans are offered and secured against the property Personal Guarantees and a Debenture will be required if the borrower is to be a company.

Speedy Turnaround—CA carefully selects its professional panel of valuers and solicitors to prioritise speed and service.  CA has years of experience funding auction purchases so understands the demands and time constraints attaching to auction purchases.

What kind of properties can be purchased?

Residential Property—you can use auction finance to buy a property regardless of its condition. Many landlords buy from auction and then refurbish or reconfigure the property to flats or perhaps an HMO, subject to planning, and then rent it out. Using auction finance allows you to get the property into a mortgageable condition and ready for a tenant or tenants to move in. CA has products which can assist with the cost of works as well as having a number of medium term investment loans which might prove suitable once the property is let.

Commercial Property—offices, industrial, retail, shops, warehouses and public houses can all be purchased using Auction Finance subject to CA’s criteria.

Mixed-Use Property—semi-commercial or mixed-use properties can be purchased with Auction Finance.

Planning potential—CA can fund properties that have planning potential. We will consider your proposals, but the loan will be underwritten on an as is basis. That is to say, the current use must be viable should planning not be forthcoming. CA can offer development finance should planning be granted and you choose to implement the planning consent.

How do I get a bridging loan for a property auction?

Do your groundwork. View auction catalogues online as soon as you can to allow plenty of time to identify the properties you are interested in. Many auctioneers will require that you register with them before the auction if you intend to bid. You should arrange for your solicitor to view the auction legal pack and dependant on the type of property that you are looking to purchase, you should consider the structural condition, the cost to renovate, planning history, local market conditions, property values and market rents. You will need to determine a clear exit strategy.

You should arrange your bridging finance before you attend the auction. Contact CA before the auction. Our experienced Lending Managers can offer you a quick decision in principle and provide you with Heads of Terms ready for the auction. All lending is conditional on receipt of a satisfactory valuation report and a clear report on title from CA’s solicitors. Stick to your maximum price—and no more. If you’re the highest bidder when the hammer falls, you’re committed to buying the property. Auction purchases are binding.

Who can borrow using CA auction finance?

CA’s bridging loan finance is available to professional property developers and investors. Whatever your plan for the property, be it to refurbish for sale or to retain as an investment, optimise planning for future development then sell or implement the planning and then sell or retain as an investment, suitable experience of completing such projects is essential.

We do not lend on properties where the applicant or a family member does or will reside at some time in the future.

How can I finance an auction property?

If you have a viable plan and the experience and vision to see a project through to fruition, we will be delighted to assist,

Contact us on telephone 020 3857 6350 or email us at info@acceptances.co.uk — and we will respond fast. We understand the auction market with decades of experience to draw on. We can have your loan agreed in principle before you bid at auction and then support you through to completion should you be the successful bidder.

How do property auctions work?

Buying at auction makes a lot of sense for property developers and investors. An auction process provides certainty. Once the hammer drops, the property is yours—neither side can back out, and there is no opportunity to gazump.

On the other hand, you, as a successful bidder are committed legally to pay the price you bid, plus fees, normally within 28 days. Contracts are exchanged at the auction. There is a fixed timescale in place that everyone understands and is bound to adhere to. The benefit is that you can make arrangements, knowing that things will happen when you expect them to.

What do ‘regulated’ and ‘non-regulated’ mean?

A bridging loan is either ‘regulated’ or ‘non-regulated’. A regulated bridging loan relates to borrowing against a property that you, or a family member occupies or intends to use at least 40% of as a dwelling. The FCA regulates these loans. Commercial Acceptances does not provide regulated facilities.

How do I buy a property at auction?

Determine the type of property you are looking for—and how much you want to spend. Is it to be an investment property? Is it a property you want to develop and sell? You then need to identify suitable property auctioneers and property auction houses. Once you’ve found the right auctioneer selling the right type of property in the locations you are after, register, and they’ll send you a catalogue of future property auctions.

Mark the lots that interest you and make sure you understand how the property is being offered. For example, some lots are offered with vacant possession, while others may have sitting tenants (people who rent the property and have legal rights to continue to do so), making those properties unsuitable for development or refurbishment in the short term.

Having identified the properties that interest you, call the auctioneers to register your interest. This way, the auctioneer can contact you if the property is withdrawn, or it’s sold before the auction. They’ll also let you know of any major changes to your lot.

Should I apply for a bridging loan before or after auction?

Be careful to understand the full cost of the project when considering purchasing property at auction. Costs will include the purchase price Stamp Duty, legal costs and potentially refurbishment/development costs, specialist professional fees, agents selling fees and interest. A short-term bridging loan is a fast and flexible way of raising funds.

CA strongly recommends you arrange finance before you attend auction. We will provide a quick in principle decision and will issue Heads of Terms which detail the proposed loan amount, term, interest rate, security required (the property and potentially Personal Guarantees and a Debenture), due diligence requirements, legal and valuation fees.

Building relationships with our customers is important, so you will be assigned a dedicated Lending Manager to manage your loan application from initial enquiry through to repayment of the loan.

More questions? Talk to us about your bridging loan now

You can have agreement on your bridging loan in principle within an hour.

Call 020 3857 6350 or email info@acceptances.co.uk

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