Property auctions offer you the opportunity to secure some fantastic houses at below market value.
However, if you do not have large cash reserves to call upon, how do you buy one of these bargain properties?
The answer for many people is with bridging finance.
There are two instances where bridging finance can help you purchase the dream property you have found.
Your existing home is yet to sell
Many people who look to buy auction properties hope to do so with the proceeds from the sale of their existing home.
When the property market was in rude health, this was not much of a problem.
However, the property sector is going through a difficult period at the moment and it could take you several months or even years to sell your home.
This is not an option when it comes to auction properties because somebody else will more than likely bid for the house if it is available at an attractive price.
Rather than missing out, you can bid for the house and pay for it with a bridging loan.
Bridging loans can be secured against your existing property, giving you the funds you need to buy the auction property.
The loan is then repaid once you have sold your current abode.
Bridging finance is useful in such circumstances because they are quick and easy to arrange. With auction properties, you must pay the ten per cent deposit and then pay off the balance within 28 days.
Many bridging loan companies can have the funds in your bank account within 14 days of you applying, giving you ample time to pay off the balance.
In such instances, an open bridging loan is the best option, as there is not set repayment date, giving you plenty of time to sell your home and raise the funds needed to repay the loan.
It is important to note that open bridging loans come with higher interest rates and the longer it takes to repay the funds, the more you will eventually have to pay.
You can use the auction property as security
Many people who buy properties at auctions do so with the intention of renovating them and selling them on at a higher price.
Rather than using their current home as security, they use the property they are bidding for.
If you are interested in such a project, you can borrow the money needed to purchase the house plus extra to renovate it.
Again, an open bridging loan may be the best way forward, as there is no way of knowing how long it will take to sell the property once renovated.
Before you come to any decisions, it may be a good idea to seek bridging loan help to ensure you understand how bridging finance works, what interest rates you can expect to pay and whether an open or closed bridging loan is the best way forward.
A lack of cash does not need to be a barrier to you obtaining the auction property you have set your heart on.
Bridging loans are commonly used to fund auction property purchase and they can work for you too, so why not pick up the phone and start dialling bridging loan telephone numbers to see what you can get.
