Auction Borrowing Criteria
What must I have to qualify for Auction Finance?
Purchasing property at an auction means working under time constraints with no time for errors. There are various checks carried out by the lender when assessing auction finance, so our aim is to make you are aware of what you need prior to making an offer for the auction.
Being compliant with the auction finance terms in advance means eliminating risks, improving chances of successful completion, and safeguarding your deposit. When buying, auction buyers sign the contract immediately hence being prepared is vastly important
What counts as auction finance criteria?
Typical auction finance qualifying criteria
| Criteria Factor | Typical Requirement |
|---|---|
Lending amount starts from: |
£100,000 |
Length needed: |
1 to 24 Months |
Locality: |
England Wales, and Scotland (dependent on individual case checks). |
Security type: |
May be residential homes, property used for businesses, land, and developments. |
Applicant age: |
Must be 18 years or older. Some lenders may require 21 years or older however. |
Residency status: |
Prior preference given to UK residents, but offshore opportunities may be available |
‘Exit strategy’: |
Should be well-articulated and realistic |
For an initial assessment of your enquiry, all we need initially is:
What the lender cares about
The lenders who finance auction purchases think about risk in a way that differs from lenders for regular mortgages. They know the importance of the speed that auction buyers need, but they still perform thorough checks.
The points they consider are primarily:
- Comparison of the hammer price to open market valuation
- The condition of the property at the time of sale
- Whether the auction sale is unconditional
- Strength and quality of the exit strategy
- The deadline for completion set by the auction
- Whether the loan is a first charge or second charge
Some lenders are quite open about credit history, while the focus of others is solely on the asset and the exit strategy. We utilise a group of specialist lenders to find the best fit based on your circumstances.
Information to be obtained during initial evaluation
To check your eligibility and give you a rapid assessment, we usually need:
- Estimated auction property value, including type of building and location
- Buying price and the deposit you can provide
- Identity certificate and address certificate
- Auction legal pack or key extracts
- Details regarding the security property and evidence supporting your exit plan
- Accounts for the company, if you are borrowing through a business or SPV
Want to know more about property auction finance?
The importance of auction finance criteria
There is no second thought when it comes to auctions. A business transaction is done whenever the hammer falls. You will not manage funds on time, chances are that you might lose your deposits.
Knowing the lender criteria before you bid:
- Reduces the chance of missing out to other interested parties
- Enhances pricing and lender choices
It gives you true confidence in making your bid. The sweet spot is prior to the auction, not following the auction.
