Talk to auction finance experts
- Properties in England, Scotland, Wales, Northern Ireland
- Interest rates from 1.02% per month
- Loan to value up to 75%
- Individuals and limited companies accepted
- Smaller loan amounts, from just £25,000
- Borrow up to £500,000
- Lower value properties, from just £75,000
- No minimum personal income for existing landlords
- Most property constructions accepted
- First time landlord/first time buyers with no rental history (personal income from £22,500)
If you have had problems with credit, we may still be able to help.
Specialist lending for your needs
Are you buying your next investment property at auction? Or buying a project property that you intend to renovate and sell? Get funding in place for a property auction with our help.
Auctioneers typically ask for a 10% deposit and the auction fee to be paid on the day of the auction, after your bid is accepted. You will then need to pay the outstanding sum within a short timeframe, typically 28 days.
For this reason, and also in instances where the property is not ‘habitable’, within the definition of mortgage criteria, auction finance is a great solution.
Property auction finance is a type of bridging loan which is secured on either the property you are buying, or another property you own. With bridging finance, interest is calculated daily, and this type of borrowing is intended to be taken over a much shorter term than a mortgage, typically 18 months. If you are looking to retain the asset within the portfolio, we can look to refinance the bridge once the works are complete with our buy to let mortgage solutions.
We take a flexible approach to funding auction purchases and look at the bigger picture. Whatever your current circumstances are, they may not stop you from borrowing with us, so call our advisors today.
You could get a lending decision in just one call.
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Our team of experts are there for you.
You'll deal with the same experienced advisor throughout your enquiry.
We can get you the funds you need, fast.
You could get a lending decision in just one call.
Why choose Mercantile Trust as your auction finance lender?
At Mercantile Trust, we value speed. Where mainstream banks may take a long time to arrange a loan for you, we could give you the funding you need in just a few days.
Buying a property at auction is a significant undertaking, especially where the property does not have a functioning bathroom or kitchen, or for another reason is not fit for human habitation and therefore not eligible for mortgage products.
It is a transaction you want to know is being handled by a lender you can trust. With tight timescales involved, being able to rely on efficient processing of your pay-out is also essential.
We will work with you from start to finish ensuring you go into auction fully prepared. With us, you will be able to go into an auction room with confidence that your funds will be with you in time for completion, hassle free.
Get world-class customer service from our advisor team. Call on our freephone number or enquire online.
- Borrowing for business or investment purposes only
- Properties in England, Scotland, Wales, Northern Ireland
- Rates from 1.02% for 1st charge
- Rates from 1.14% for 2nd charge
- Up to 75% loan to value
- No personal income requirement for existing landlords
- Minimum property value £75,000
- Borrow £25,000 - £1,000,000
- Pay monthly or at term end
- No Early Repayment Charge
- No exit fees
- Most property constructions accepted
Frequently asked questions
Auction finance is a type of bridging finance used for buying properties at auction. It’s typically used to complete a transaction quickly (auction houses tend to require payment within 28 days).
Auction purchases generally have to be completed soon after the auction, and in most cases a conventional mortgage either cannot be arranged (if the property is not habitable) or may not be available within that time period.
The auction house will usually ask for a 10% payment of the purchase price plus their auction fees at the time you win the auction, giving you another 28 days (at most) to complete your purchase.
You can then look to refinance your auction purchase with a longer term solution such as a buy to let mortgage.
Auction finance enables you to borrow large amounts of money, quickly.
The actual amount you can borrow varies between lenders, who set criteria on how much they are prepared to lend. The lender will also state how much of the property value they are prepared to lend, versus how much they require from you as the borrower to put down of your own money.
The lender will also want to know how you intend to pay-off the auction finance loan. This is often referred to as your ‘exit strategy’. You may choose to sell the property, or transition to longer term finance such as a mortgage.
As with other types of finance, the lower LTV you choose to borrow at (i.e. the more deposit you provide yourself), the less you’ll need to borrow. This will typically reduce the overall cost of the loan, as the lender will be taking on less risk.
Auction finance is a more expensive type of borrowing than a mortgage.
Auction finance is intended to be taken out over a much shorter term than a mortgage, due to the higher cost. The reason auction finance is more expensive than a mortgage is because the risk to the lender is higher.
Like any form of lending the interest rates are calculated on the risk of the finance not being paid back. To mitigate this risk lenders ask you to have a feasible exit strategy when you take out the loan. This usually tends to be one of two things:
- either you plan to sell the property and repay the loan from the proceeds
- or you plan to switch to a longer term form of finance, typically a mortgage
One of the main benefits of auction finance is the speed at which it can be arranged. Most auction houses require payment within 28 days, which is usually not enough time to arrange a buy to let mortgage.
Auction finance allows you to borrow a large amount of money and can be completed in just a few weeks (sometimes even quicker depending on the situation). Because they are so quick to arrange, property investors who spot a bargain at auction are able to get the finance they need quickly.
It’s important to remember that the more complex the case, the longer it may take to complete. Also, the speed of completion will always depend on how quickly you provide any required information, or return any paperwork to the lender.
Yes. If you have a poor or bad credit profile you could still get auction finance. There are a lot of lenders that won’t help you if you have less than perfect credit, but some do.
Mercantile Trust considers all credit histories, including those that have:
- Accounts in default
- CCJ’s (County Court Judgement)
- Missed payments
- Historic IVA (individual voluntary arrangement) which is now settled
The cost of auction finance will depend on how much you borrow, how long for and the interest rate.
Just like most forms of borrowing, the more you borrow, the more you will need to repay. The interest rate you pay will also dictate the cost of your loan.
Special borrowing, like auction finance, is typically more expensive per month than a mortgage because interest is applied monthly, not annually. In addition to the interest charges, there are several other elements to take into account such as valuation fees, exit fees and solicitor fees.
The only real alternative to auction finance, is to purchase in cash. Some landlords do buy with cash at an auction and then, having secured the property, immediately start to arrange longer-term finance such as a buy to let mortgage.
If you have cash available, this will be the fastest route to settling the auctioneer’s bill, but if you don’t, auction finance could be a suitable alternative.
There are two main types of auction finance or “bridging” loans: traditional or “first charge bridging loans”, and “second charge bridging loans” where the asset being used as security will retain an existing mortgage.”