Bid in an Auction and Pay With Bridging Loans

By: Gracy Bonsu

You may be an estate agent or a first time buyer taking part in an auction of immovable property. If you come out successful as a bidder in the auction, the next challenge ahead is to complete the auction deal and make the payment within a 28-day time frame. It may become difficult in case there is a shortage of hard cash or if you are unable to turn your assets into cash in such a short period of time.

Estate agents who are always in hunt for a good opportunity purchase property at low rates in auction and later on sell the same property in the open market at higher prices. This is one way that brings them high returns from the property market. Smart consumers who are willing to take this challenge can also participate in auctions and place their bids. Normally, auctions involve open bid but it may also be sealed tender process where every bid is kept confidential until it is opened out by the auctioneer. In this process, a person with the highest bid gets the property.

Bridging Loans are a useful means of repayment in case of shortage of money for a temporary period. Generally, the rate of interest is fixed as the repayment period is hardly more than 6-12 months. There is a bit of caution that borrowers need to exercise in this case. After remaining successful in the auction, mostly the borrowers take whatever bridging loan deal that comes their way. The rate of interest is compromised as there is a very short period available to a successful bidder to make the payment and complete the auction purchase. But, if you shop around and make a well-informed decision then you are likely to get these loans at competitive rates. It will save you money as even one percentage point can make a huge difference in the interest payments when the amount of loan is considerably higher.

There are many companies in the UK loan market that offer a specific service to cover auction payments. These companies provide non-status loans especially for auction transactions. It means that your residential status would not be considered in granting such loans. The companies providing bridging loans may not have minimum loan period requirement and early repayment penalty provisions, but they might charge a high rate of interest from the borrowers.

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