Auction Finance
Bid with confidence. Pre-approved bridging finance to complete within the standard 28-day auction deadline ” adverse credit considered.
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No upfront fees · Business enquiries only · Min. £25,000
What is Auction Finance?
Auction finance is a specialist bridging loan arranged specifically to facilitate property purchases made at auction. When a buyer wins a lot at a traditional (unconditional) auction, they become legally bound to complete within 28 days and pay a 10% deposit on the day. Standard mortgage lenders cannot operate within this timeframe. Auction finance bridges the gap ” funds are arranged in advance or immediately post-auction to ensure completion.
- Traditional (unconditional) auction: 28-day completion deadline
- Modern Method of Auction (conditional): typically 56 days
- Decision in Principle available before auction day
- Adverse credit and non-standard properties considered
- No monthly repayments required (interest retained)
How Does Auction Finance Work?
Pre-Auction Approval
Where a specific lot is identified in advance, we arrange indicative terms or a Decision in Principle before auction day. This confirms your maximum bid ceiling and gives lenders time to begin due diligence on the title.
Auction Day
You bid with confidence up to your pre-agreed limit. If successful, you sign the memorandum of sale and pay the 10% deposit. The 28-day clock starts.
Valuation
The lender instructs a RICS surveyor to value the property. For standard residential properties, some lenders accept automated valuations, significantly speeding up the process.
Legal Work
Both parties instruct solicitors. The lender requires a clear title report. Auction packs typically contain much of the required information ” your solicitor should review these pre-auction.
Drawdown
Funds complete within the 28-day deadline. The balance (purchase price less 10% deposit) is transferred to the vendor's solicitor.
Exit
You refinance to a buy-to-let or term mortgage once the property is tenanted or renovated, or sell the property.
How is Auction Finance Secured?
Auction finance is secured by a first legal charge over the auction property being purchased. The lender registers at HM Land Registry on completion. The 10% deposit paid on auction day forms part of your equity contribution ” the bridge funds the remaining 90%, subject to LTV limits.
Exit Strategy
All lenders require a credible exit strategy before funds are released. Common exit routes include:
- Refinance to a buy-to-let mortgage once the property is tenanted
- Refinance to a residential mortgage (if for own occupation ” via a company)
- Sale of the property after refurbishment
- Refinance to a commercial or semi-commercial mortgage
Is Auction Finance a Good Idea?
Advantages
- Enables participation in property auctions without pre-arranged mortgage
- Fast approval ” Decision in Principle before bidding
- Access to below-market value properties sold at auction
- Adverse credit and non-standard property types considered
- No monthly repayments during the bridging term
Considerations
- Higher cost than a standard mortgage
- The 10% deposit is non-refundable if completion fails
- Auction packs must be reviewed by a solicitor before bidding
- If the valuation is lower than the purchase price, LTV may limit the loan available
How to Secure Auction Finance
Identify Your Target Properties
Review the auction catalogue in advance. Share target lots with us so we can pre-assess viability and arrange indicative terms before auction day.
Legal Pack Review
Instruct a solicitor to review the legal pack before the auction. This identifies any title issues that could affect the lender's decision or delay completion.
Obtain a Decision in Principle
We approach suitable lenders with the property details and your financial profile. A DIP confirms the likely loan amount and gives you a confident bid ceiling.
Bid and Win
Bid up to your pre-agreed limit. On winning, pay the 10% deposit and notify us immediately.
Complete Within Deadline
We expedite the formal application, valuation and legal work. Most completions for standard residential properties occur within 10“18 working days.
How Much Can I Borrow?
The loan amount is determined by the auction purchase price and the lender's LTV limit on the security. Most lenders will fund up to 70“75% of the purchase price for standard residential property.
- Residential investment property: up to 75% LTV
- Commercial and semi-commercial: up to 65“70% LTV
- Uninhabitable or non-standard property: 55“65% LTV
- Minimum loan: £25,000
- Practical maximum determined by purchase price and LTV
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How Quickly Can I Get a Loan?
The 28-day auction deadline is achievable for standard residential properties with a physical valuation. Desktop and AVM valuations, where accepted by the lender, can enable completion in 7“14 days. Modern Method of Auction (56 days) provides more time but the same process applies.
Eligibility Criteria & How to Apply
- UK-based business, limited company, LLP or individual property investor
- Property purchased at a registered UK property auction
- Minimum loan £25,000
- Clear exit strategy ” refinance or sale
- Adverse credit assessed on merit ” CCJs, defaults, IVA history considered
- Non-standard and uninhabitable properties considered by specialist lenders
9 Example Uses of Auction Finance
Residential Investment
An investor buys a tenanted Victorian terrace at auction at 15% below market value. Auction finance completes in 18 days; a BTL mortgage refinances within 3 months.
Commercial Conversion
A developer acquires a former office building at auction, converting to residential under permitted development. Bridge funds acquisition; development finance covers conversion costs.
Repossessed Property
A bank sells a repossessed property at auction. The buyer uses auction finance to secure the asset quickly and renovates before refinancing.
HMO Opportunity
A portfolio landlord acquires a large house at auction suitable for HMO conversion. Bridge funds the purchase; a specialist HMO mortgage refinances after licencing.
Below-Market Purchase
A property is sold at auction due to probate. The buyer secures it below market value, bridges, and sells after light refurbishment.
Adverse Credit Buyer
A director with a settled CCJ cannot access standard mortgage lending but has a strong asset base. Specialist auction finance is available.
Land at Auction
A parcel of land with outline planning is acquired at auction. Bridge finance funds the purchase; development finance takes over once full planning is obtained.
Commercial Investment
A business owner acquires a commercial unit at auction to use as company premises. A commercial mortgage refinances once the bridge term expires.
Mixed-Use Property
A mixed-use building (retail ground floor, flats above) is acquired at auction. Semi-commercial bridging funds completion; a specialist term lender refinances.
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