0808 189 0463


        0808 189 0463

        Property Auction Finance

        Need a form of auction finance for your next property purchase? There are lots of options! Find out exactly what your next steps should be in our in-depth guide.

        Firstly, are you looking for a Bridging Loan?

        No impact on your credit score

        If you’re on the hunt for a bargain property, perhaps to renovate or rent out, auctions can be a treasure chest of property gems. The caveat, however, is that you need to settle the payment within 28 days. With mortgages taking anywhere between two to six weeks to process, this is where auction finance can help. 

        What does it involve? How can you access it? Who is eligible to apply? This guide will give you a better understanding of how to open up your property ownership options through auction finance and breakdown everything you need to know about obtaining it.

        What is auction finance and how does it work?

        Auction finance is a type of bridging loan. It’s a way of accessing capital in order to make a purchase at an auction when you don’t yet have the cash or a mortgage in place. It usually takes around 14 days to process although this is contingent on you meeting the lender’s requirements, having a deposit and sharing a viable plan for repayment, otherwise known as an exit strategy. The most common exit strategies include refinancing onto a conventional mortgage or selling the land or property after renovation.

        The lending term for auction finance is anywhere between 1 to 24 months and the higher interest rates on this type of finance means you’ll want to pay it off as soon as you can.

        If buying a property at an auction is something you want to explore, it’s advisable to seek some expert advice from a specialist broker.

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        Maximise your chance of approval with specialist advice from a mortgage expert.

        How much can be borrowed?

        Auction finance lenders usually offer anything between £50,000 to £15 million but different lenders have different limits and the amount they’re willing to lend to each individual is dependent on the circumstances.

        Some, such as Glenhawk, will only loan £150,000 to £2 million while Ortus Secure Finance will extend that to £25 million.

        Calculate your repayments

        Our auction finance calculator below will give you an approximate idea of how much your monthly repayments could be for this type of loan. Simply enter the details for the property you’re looking to purchase, amount you need to borrow and over what term length. You can also input different interest rates to see how your payments could change depending upon the rate you can get from different lenders.

        calculator icon

        Auction Finance Calculator

        This calculator will tell you how much your bridging loan will cost each month and work out your loan-to-value ratio to give you a better idea of whether your finance agreement is affordable.

        How much you're borrowing
        Number of months you're taking the loan over
        This is the monthly interest rate
        Loan amount must be less than property value


        Total monthly payment:

        Total interest:

        Now that you have a clearer idea of how much your loan will cost, you should speak to a bridging finance broker to explore all of your options and boost your chances of getting the best deal possible.

        Types of properties you can buy

        Residential homes – flats, bungalows, and houses – are just one of many property types available at an auction. You can also take the opportunity to purchase a plot of land or a commercial property, a mixed-use unit or even a house in multiple occupation. Agricultural properties as well as those considered unmortgageable by lenders are also options.

        How to apply for auction finance

        If you’re interested in purchasing a property at an auction and need to arrange short-term finance, there’s some simple steps you can take to ensure this is in place swiftly, so you don’t miss out. Here’s how we recommend you do it.

        Step 1. Choose the property or land you’d like to bid on

        A few weeks prior to an auction, any land and properties for sale will be listed in an auction catalogue. It’s advisable to visit any you’re interested in to evaluate any work needed and approximate cost. Then do the calculations to determine your maximum bid and the corresponding deposit amount.

        Auctioneers only require you to pay a 10% deposit at the time of sale, so you don’t necessarily need to have your finance in place ‘before’ you place a bid. As long as you have the deposit so you can pay that on the same day as the auction then you could organise your auction finance in the 28 days following.

        The risk, however, would be that you don’t get approved and are unable to pay the full price. In this case, you could potentially lose the deposit and risk further penalties given a sale at auction is considered legally binding.

        Step 2. Connect with a broker specialising in auction finance

        Saving you time and money, a broker with experience in this field will be able to advise on which auction finance lender to apply to and can help you figure out how much you need to borrow.

        The brokers we work with are specialists in this area of financing and can help prepare your application beforehand, making the process much more straightforward. If you get in touch we’ll arrange for an advisor to contact you directly.

        Step 3. Prepare your application and make your bid

        This should include proof of your deposit, a document laying out your exit strategy, your credit reports and a valuation report of the property you’re hoping to buy. If approved you’ll receive an agreement in principle with information on the rates and terms they’re willing to offer.

        With an agreement in principle, you can bid with confidence. If you’re the highest bidder, you’ll pay the deposit alongside any auction fees that day. The remaining balance will need to be paid within 28 days.

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        What lenders are looking for

        Lenders tend to be a little more lenient when it comes to auction finance. There will still be an interest in your income and spending, credit history and debt but any discrepancies or concerns don’t necessarily equate to a rejection.

        Instead, lenders put more of an emphasis on:

        • Your exit strategy: If that involves renovating the property, they’ll want to see plans and know you have the expertise to undertake such a project. If it involves a remortgage, a mortgage in principle could help.
        • Your property development knowledge: If your exit strategy is to quickly renovate and sell, it’s important you inform your lender of any experience you have in doing so. If you don’t have any, a broker will be able to identify lenders still willing to lend.
        • Your age: Some lenders will stipulate that you must be above a certain age to borrow. For example, LendInvest has a minimum age for all borrowers of 21.

        The deposit required

        Depending upon the strength of the application you can expect a loan-to-value of somewhere between 40%-75% although the higher end of that is more common. This means you’d need to have at least 25% of the sale price as a deposit. Of course the bigger the deposit, the less risky you’re deemed to be and the better chances you have of getting a favourable interest rate.

        If access to hard cash is an issue, some lenders will accept other collateral such as another property but it’s best to consult a lender if this is something you’d like to explore.

        What interest rates do you pay?

        While high street banks don’t tend to offer auction finance, there are many specialist lenders who do, including West One, Colenko and Roma. Given the quicker turnaround and the increased risk this type of finance can pose to lenders, their interest rates do however tend to be higher than those on conventional mortgages.  The rate you qualify for all depends on the lender and how risky they perceive your situation to be.

        You then have a few different ways of paying that interest:

        1. Monthly: You can opt to pay only the interest rate each month leaving the actual loan to be paid off in its entirety at the end of the lending term.
        2. Rolled up: Here you pay both the loan and the interest rate together at the end of the term. That means the monthly interest amount will be added on to the loan as a lump sum.
        3. Retained: Instead of making the calculation at the end of the term, the interest is added up at the start and added on to the loan amount then. You then “borrow” that full amount and pay it off at the end.

        To understand which arrangement might be best for you and to ensure you get access to the most agreeable rates, it’s advisable to apply through a broker specialising in auction finance.

        Note that most lenders will also charge a fee for auction finance. This is usually between £1,500 and £2,500.

        Alternative options

        Auction finance isn’t the only solution available when it comes to buying a property at auction. You could consider:

        • Development finance: This is a short-term loan specifically designed to support the renovation or refurbishment of a property, if the one at auction you’re looking to buy requires extensive work. You can then refinance post-project or sell on to repay the loan.
        • Borrowing from family: If you’ve got a family member willing to lend you a set amount until you can pay them back this could be ideal as it means avoiding interest payments.
        • Secured loans: If you own another property, a boat or other valuable asset, one option could be to put this up as security for a loan. You’d need to have this valued and should approach a broker before applying to a lender.

        Meet with an auction finance expert

        Buying at auction adds a dimension of speed to the sales process and moving against a clock can mean making hasty decisions. In this scenario, working with a broker well-versed in auction finance is vital.

        They’ll save you time by shortcutting your search for an auction lender – they already know which ones are likely to offer the best rates –  and help you get the best deal possible within the 28 day window.

        The brokers we work with know which exit strategies work and can advise you from application right through to repayment. Call 0808 189 0463 or make an enquiry today to get matched to a broker and schedule a free, no-obligation consultation.


        No. It can be used for other items as long as the purpose is legal and the lender approves of the exit strategy.

        You can bid online or by phone as well as in person or by proxy. Regardless, it’s advised you decide on your maximum bid beforehand and have 10% of that set aside for the deposit if you win.

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        Pete Mugleston

        Pete Mugleston

        Mortgage Expert, MD

        About the author

        Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

        Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

        FCA Disclaimer

        *Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

        Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.