Auction finance
Buying at auction means exchanging on the fall of the hammer and completing in as little as 28 days. A bridging loan is how most investors fund it.
Why auction purchases need bridging
At a traditional auction you exchange contracts the moment the hammer falls and pay a 10% deposit there and then. Completion usually follows within 28 days, sometimes less. A standard buy-to-let mortgage rarely completes that fast, and many auction lots aren't mortgageable yet anyway: no kitchen, short lease, structural issues or no tenant history. Miss the deadline and you can lose the deposit.
A bridging loan is built for this: valued and completed in weeks, secured on the property as it stands, and repaid once you sell or refinance.
What to do before the auction
- Read the legal pack with your solicitor: title, lease length, searches, special conditions and any extra fees payable by the buyer.
- Get indicative terms on the lot before you bid, so you know the maximum loan and the cash you need. Get instant terms.
- Line up the valuation: many lenders can instruct quickly, or accept a pre-auction inspection.
- Plan the exit: a sale, or a refinance once works are done. See bridge-to-let.
- Have the deposit and costs ready: 10% on the day, plus the auction house's fees, stamp duty and legal costs.
How much can you borrow?
Bridging lenders typically lend up to 70–75% of the value, gross of fees and any retained interest. If you buy below market value, some lenders lend against the valuation rather than the price, which can reduce the cash you need. Run the figures in the bridging loan calculator, and see below market value bridging if you are buying under value.
Modern method of auction
Online "modern method" auctions usually give 28 days to exchange and a further 56 to complete, with a non-refundable reservation fee. There's more time, but the reservation fee and the deadline still make finance arranged in advance worth having.
Frequently asked questions
How quickly can auction finance complete?
Bridging can complete within the typical 28-day auction deadline when the valuation and legal work are started early. Getting terms before you bid makes the biggest difference.
Can I get a mortgage on an unmortgageable auction property?
Often not straight away. A bridging loan funds the purchase and any works, then you refinance onto a mortgage once the property is mortgageable.
How much deposit do I need for an auction purchase?
The auction deposit is usually 10% on the day. With a bridging loan at 70–75% of value, you need the balance plus fees, stamp duty and legal costs.
What happens if I can't complete in 28 days?
You can lose your deposit and face further costs. That's why finance should be lined up before the auction.
Got a deal in front of you?
Get indicative bridging terms on your case in a few minutes, or tell us about it and a specialist will come back to you.
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All finance is subject to the lender's assessment, case by case. Criteria, loan amounts, works funding and terms vary by lender and change without notice. DasLend is an introducer only. We pass enquiries to specialist lenders and FCA-regulated firms; we do not lend, advise or arrange finance. All figures are illustrative, not a quote or an offer. Property used as security may be repossessed if you do not keep up repayments.