Auction finance is short-term bridging used to complete on a property won at auction within the standard 28-day deadline. A standard residential mortgage almost never completes in 28 days, so buyers use bridging to secure the property and refinance to a long-term mortgage afterwards.
What Is Auction Finance?
"Auction finance" is the industry shorthand for a bridging loan used to complete an auction purchase inside the deadline set by the auction house. It's not a separate product — it's a standard bridging loan, but underwritten and drawn down at speed.
You use the bridging loan to buy the property and meet the deadline, then refinance onto a long-term mortgage (your "exit") within the next 6–12 months.
Traditional vs Modern Method of Auction
| Type | Deposit on day | Completion deadline | Suitable finance |
|---|---|---|---|
| Traditional | 10% on the fall of the hammer | 28 days | Bridging only |
| Modern Method | Reservation fee (typically £6,000+ inc. VAT) | 56 days | Fast mortgage or bridging |
If you're buying via the modern method, talk to us before bidding — a fast-tracked residential mortgage can sometimes save you the cost of bridging.
What to Do Before Auction Day
- Get a bridging Agreement in Principle — based on your maximum bid. Without this, you're bidding blind.
- Read the legal pack — get your solicitor to review it. Auction sales often include unusual covenants, short leases or special conditions.
- Arrange a survey — at minimum a Level 2 survey on residential, or a full structural on anything with damp, subsidence or unusual construction.
- Confirm your exit — talk to a mortgage broker about whether the property will be mortgageable post-purchase. If it won't, your bridge has nowhere to go.
- Check building insurance — required from the moment the hammer falls, not from completion.
- Set a hard ceiling — including all fees, stamp duty and the buyer's premium.
Speak to a Mortgage Adviser
Get expert, whole-of-market advice tailored to your situation. We'll find the right deal — and any costs are always agreed upfront.
How Much Does Auction Finance Cost?
Worked example: £200,000 auction purchase, 6-month bridge
- • Loan amount: £150,000 (75% LTV, you put in £50,000)
- • Monthly interest at 0.75%: £1,125/month (£6,750 over 6 months)
- • Arrangement fee (1.5%): £2,250
- • Valuation fee: £500–£1,000
- • Legal fees (lender + your own): £1,500–£3,000
- • Total cost of finance: c.£11,000–£13,000
Interest is usually "rolled up" — added to the loan balance and repaid on redemption — so you don't make monthly payments during the bridge. Compare quotes carefully: a slightly higher rate with no exit fee can be cheaper than a low rate with hidden charges.
Your Exit Strategy Is Everything
No bridging lender will lend without a credible exit. The two standard exits for auction finance are:
- Refinance to a residential mortgage — for properties you'll live in. Best for owner-occupier auction buyers.
- Refinance to a buy-to-let mortgage — most common for investors. Often based on a higher post-refurbishment valuation, releasing some of your original deposit.
- Sale of the property — common for flippers and developers.
We'll plan the exit at the same time as the bridge so you know it works on day one — not 5 months in when the bridge is approaching its deadline.
Common Pitfalls (and How to Avoid Them)
- Bidding without finance — the most common mistake. Always pre-approve.
- Ignoring the legal pack — restrictive covenants, missing title, short leases all derail finance.
- Unmortgageable security — non-standard construction, no kitchen/bathroom, or sub-30 year lease all block standard remortgage exits.
- Underestimating the timeline — 28 days includes weekends and bank holidays. Realistically you have 18–20 working days.
- Forgetting stamp duty — at completion, not at the hammer. Don't budget without it.
Speak to a Mortgage Adviser
Get expert, whole-of-market advice tailored to your situation. We'll find the right deal — and any costs are always agreed upfront.
Get an Auction Finance Quote
If you're considering an auction purchase, get an indicative quote and Agreement in Principle before you bid. We'll match you with the right specialist bridging lender for your scenario, work to your auction deadline, and plan your exit from day one.
→ See our auction finance page and get a quote
Or browse the wider bridging finance hub if you're weighing up other options. Speak to an adviser for a same-day callback.
Frequently Asked Questions
- Can I get a standard mortgage for an auction property?
- Almost never within the traditional 28-day deadline. Standard residential mortgages take 4–8 weeks to complete from offer. The Modern Method of Auction allows 56 days, which can occasionally accommodate a fast-tracked mortgage — but bridging remains the safest route.
- How much deposit do I need for auction finance?
- Most auction bridging lenders require 25–30% deposit (so they fund 70–75% LTV). 100% loan-to-purchase is possible if you offer additional property as security.
- What happens if I miss the 28-day deadline?
- You forfeit your 10% deposit paid on the day plus the buyer's premium, and the auction house can sue you for the difference if the property is later resold for less. The 28-day deadline is legally binding once the hammer falls.
- Can I bid at auction without finance in place?
- You can — but you shouldn't. Without an Agreement in Principle from a bridging lender, you have no idea whether your purchase is fundable. Always get pre-approved before bidding.
- What's a typical exit strategy for auction finance?
- Most buyers refinance the bridge onto a standard residential or buy-to-let mortgage within 6–12 months. Investors often refurbish and refinance based on the higher post-works valuation. Property flippers use sale as the exit.
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