The specialist lender and Acuitus Finance – part of the leading commercial real estate auctioneer –have designed the product to address the mismatch between the amount of time required for an investor to complete an auction purchase and the time taken for a traditional loan to be approved.

Octopus will provide a 50% loan-to-price bridging loan based on the price paid at auction for properties that sell for £500,000 or more.

No further valuation will be required, which Octopus has claimed would save borrowers around £3,000-5,000 in valuation costs.

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Octopus Property pre-approved auction loan terms:

• minimum loan: £250,000
• maximum LTV: 50%/up to 65% with further normal underwriting
• interest: 0.9% per month
• arrangement fee: 1%/no exit fee
• term: six months
• minimum interest period: one month

Octopus has also managed to simplify the legal process and remove the requirement for a full report on title after agreeing special terms with Titlesolv to procure title indemnity insurance.

“Market access to readily available and competitively priced financing remains difficult, as lenders are unwilling or unable to structure loan deals that sit outside the traditional parameters,” said Ludo Mackenzie, head of commercial property at Octopus Property (pictured above).

“With this product, we are again demonstrating a new way of approaching real estate finance, [by] providing borrowers with a simple yet comprehensive bridging solution.”

Acuitus currently holds six auctions a year in London, selling between £300m-400m of UK commercial property assets to a range of established property investors.

“This loan product is a major step forward in terms of streamlining the auction-buying process for investors,” said Stuart Buchanan of Acuitus Finance.

“Once an auction purchase is complete, Acuitus Finance can then advise on the best options available to refinance an asset on a long-term investment loan.

“To complement the new bridging product, Octopus Property has also introduced a new interest-only, long-term investment loan, which can refinance the bridging loan at a reduced fee.”