Do your homework before making a bid at auction
So often we at KIS are finding ourselves having to quickly arrange bridging finance for people who have bid at property auction without doing their homework! Typically this will involve making a winning bid at auction before finance facilities had been fully looked into, or having not viewed the property themselves or by a property surveyor. Therefore we are often asked to arrange urgent bridging loans because other facilities are not available due to time constraints or the condition of the property being purchased.
It is really important to view and ideally have surveyed any property that you intend to bid on at auction. It is also important to have your solicitor look at the legal pack that is available for each property from the auction house before the auction date, so that they can make you aware of any important factors contained with them.
Most important though is to ensure that you have the necessary funds or finance facilities in place before you make a bid. This is because if you make a winning bid you have just entered into a legal contract. 10 per cent of your bid will be required on the day as a deposit and if you do not complete within the normal 28 days then you will probably lose all your deposit. Although 28 days is the normal period in which to complete the purchase for property bought at auction, this can be different and any special conditions should be checked because there may be a requirement for completion within as little as 14 days.
If arranging finance to complete the purchase then bridging loans are often popular because they can be arranged quickly and have more flexibility when it comes to the condition of the security property. If considering bridging loans as a funding option, make sure that you have a facility in place before you make any bids, and have a plan as to how you are intending to repay the loan. Bridging loans are not a long term finance option, so you need to either be intending to sell the property after perhaps carrying out some improvements, or you are planning to refinance it using a buy to let mortgage or some other longer term finance facility.
You can also talk to us about buy to let mortgages because we have special plans that can facilitate putting buy to let mortgage facilities in place within as little as 2 weeks from application to completion. These express buy to let mortgage facilities are very useful because they can avoid having to take out a bridging loan, instead going straight for the mortgage facility. This obviously saves all the bridging loan costs.