What’s with all these high rollers? Most of them manage to acquire commercial or residential property on short notice, no problem. They seem to have access to money instantly and win the bids at auctions. But how do they do that exactly?
Easy. They use a simplified form of property bridging loan called auction finance.
What is auction finance, and how does it differ from what many people know about bridge lending and property financing? What kinds of properties can auction finance be used for? What kinds of people can use it, and how do they get it? You’ll find out the answers to these questions and more in the following article:
What is Auction Finance?
The term “auction finance” refers to the lending for a property purchased at an auction.
The auction finance can be used by those who want to purchase a property at a discount during an auction and then fixed for several months. The borrower has to pay interest for the loan, but the longer tenure saves him from paying, the higher bank rate of interest.
How Does It Work?
The borrower needs to find a lender who can lend money on the borrowed property and then bid to buy it at a much lower price. The lender can take the security of the property and charge interest on the loan amount.
So the lender makes money by charging interest on the temporary loan plus profits on the deal made by the borrower.
It is a win-win situation for both the borrower and lender. The borrower pays a lower price for the property while the lender earns high profits.
What Properties Can You Buy with Auction Finance?
Auction finance can be obtained for commercial property, industrial property, offices, or residential property.
The borrower can bid for the property of his choice, and once the bid is won, the loan amount is transferred to the seller’s account. And the deal is done.
But the loan tenure is only for a concise period of time. However, the borrower can sell it quickly and make a profit in a short time.
What’s more, the bidder can get a property at a very cheap price and then use it for his commercial or residential needs.
Who Can Use Auction Finance?
People who want to buy property at a low cost and fix it for a short period of time can use auction finance. The borrower has to find a lender who offers auction finance.
It can be used by individual buyers, small businessmen, real estate dealers, and property investors. It will work well for people who want to buy a property at a cheaper rate but cannot finance it through a regular bank.
Conclusion
Auction finance is the best bridge lending option for people who want to buy a property for commercial use. It is an easy, flexible and convenient way to buy commercial property.
There is no need to wait for the loan approval from the bank. And there are no monthly repayments. It is just an arrangement between the borrower and lender to buy the property at a very low rate and sell it soon.
If you are interested in bridge lending solutions in Chester, A Move Brokers can help you. Contact our team today to learn more about our services!
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.