Currently viewing the tag: "bank refuses to fund"

30% of buyers who bid successfully at property auctions are let down by mainstream lenders, say experts.

Banks are pulling out of property deals after property investors have made successful bids at auction, resulting in buyers struggling to raise finances in order to meet the 28 day completion deadlines set by many auction houses, resulting in a great deal of business for bridging finance companies.

National Development Manager at Auction Finance, Scott Hendry, said:“It’s all too common for high street banks to pull out of funding an auction transaction because of the short timescales for completion or the property has no kitchen or bathroom. Yet most people bidding at auction want the property quickly so they can renovate it to sell on or rent out at a profit. Sometimes bidders assume that the funding has been agreed by the bank or lender when in fact they only have an ‘agreement in principal’ which is wholly different from a real approval to borrow the amount required for the property. We estimate that in 2012, so far, 30% of property investors we have dealt with have had to rely on short-term finance to fund their purchase because their previous lender has let them down. In some cases they have been able to agree long-term funding with their bank at a later date but this process just takes too long for someone trying to secure a good investment opportunity at auction.”

Top reasons why auction property deals fall over:

  • Bank pulls out of the funding due to short timescales
  • Bank refuses to fund because the property has no kitchen or bathroom
  • Borrowers assume the funding has been agreed
  • Delays in depositing the funding from the bank
  • Last minute revelations on the borrower’s credit check prevent funding

A short-term bridging loan secured against other properties in a portfolio is one way to avoid being let down at the last minute.

There Will Never Be A Better Time To Invest In Property

MyPropertyPowerTeam.co.uk helps property investors and landlords build their own property power team to enable them to profit from property - Visit our main site now!