Auction finance: terms before you bid, funds before the deadline.
You exchange the moment the hammer falls and you usually have 28 days to complete. Bridging is the only finance built for that. Here is how we run an auction purchase so the deadline is never in doubt.
How an auction bridge works
The 10% deposit is paid on the day from your own funds. The bridging loan pays the remaining 90% (less your equity) at completion, normally 28 days later, sometimes 14 or 20 under modern method or conditional auctions. Interest is retained, so there are no monthly payments; you repay when you sell or refinance.
The sequence that works: we get indicative terms on the lot before the auction, ideally with the legal pack reviewed by your solicitor. You bid knowing your maximum and your net loan. When you win, the lender already has the property on file and we instruct the valuation the same day.
What lenders want to see
- The legal pack, read. Restrictive covenants, short leases, missing title, overage clauses and tenancies all affect lending. A solicitor's five-minute read before you bid saves a declined loan after.
- A valuation that supports the price. Most lenders lend against the lower of purchase price and valuation. If you buy well below market value, some lenders will lend against value rather than price, which reduces the cash you need. Ask us which.
- The exit. Refinance on to a buy-to-let mortgage once refurbished, or sale. If the property is unmortgageable as it stands (no kitchen, structural issues, short lease), the lender will want to know how it becomes mortgageable.
- Your deposit and costs in a bank account. Not "available"; visible.
Typical terms
Up to 75% of purchase price for residential lots, 65% to 70% for commercial and mixed use. Rates from around 0.6% per month for a clean residential lot, more for property that needs work or has title complications. Arrangement fee 2%. Terms of 6 to 12 months are usual, and unused months are normally refunded if you redeem early.
Where auction deals go wrong
- Bidding before the legal pack is read. The most common cause of a lost deposit.
- Assuming a mortgage will do. Mainstream lenders rarely complete in 28 days, and never on a property with no kitchen or bathroom.
- Underestimating the net loan. A £300,000 gross loan with retained interest and fees might release £265,000. If you planned on £300,000 you are short at completion.
- Valuation access. Auctioneers control keys until completion. We arrange access through them the day after the sale.
Lots we have seen financed
Ex-local-authority flats in London, tired terraces in Kent and Sussex, mixed-use shops in market towns, part-built houses, agricultural barns with permitted development rights, blocks bought from receivers. Auction property is, by definition, the stuff mainstream lenders do not want. That is exactly the market bridging lenders exist for.
About the numbers on this page. Rates, fees and loan-to-values are typical market ranges for unregulated bridging in England, given so you can size a deal. They are not an offer. Your terms depend on the property, the exit, the lender and you.
Questions we get asked
Can I get terms before the auction?
Yes, and you should. Send us the lot number and the guide price and we will get indicative terms on it, usually within a day. Then you bid knowing your ceiling.
What if I buy at a conditional auction with a 56-day completion?
Easier, not harder. The extra time takes the pressure off the valuation and the legal work. Some buyers use it to get a term mortgage instead; often the bridge is still needed because the property is not mortgageable as it stands.
Will the lender lend on the valuation if I buy below market value?
Some will, subject to a valuation and usually at a lower percentage of value than of price. It can reduce the cash you need significantly. Tell us the price and the comparables and we will find out.
The property has no kitchen. Is that a problem?
Not for a bridging lender. It is why the property is at auction and not on Rightmove. It becomes a problem only at exit, so the lender will want to see a works budget and a plan to make it mortgageable before you refinance.
What happens if I cannot complete in time?
You lose the deposit and can be sued for the difference on resale. Which is why we start the loan before the auction, not after. If a genuine delay happens, most sellers will agree a short extension for a fee; the lender will usually keep the offer open.
Tell us the deal.
A few numbers and a postcode is enough for a first view. Indicative terms cost nothing and commit you to nothing.