Auction Finance

Property Auction Finance

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  • 2 Decades of Experience in Financing Auction Properties

  • Competitive Auction Bridging + Medium to Long Term Products Available (with Price Match Guarantees)

  • Tailormade Auction Finance Catered Your Requirements

  • Adverse Credit Options Available (All Income Types)

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Property Auction Finance

Thanks for checking out our property auction finance guide.

The following content aims to equip you with the best knowledge on how to source this type of funding and, of course, get the best possible deal!

Property Solvers Auctions continue to regularly update the post in line with what is a fast-evolving sector.

Please also email us at [email protected] with any further questions.  The team is always more than happy to assist.

Bridging Finance on Property

Informally known as ‘flash finance’, property auction buyers often use bridging loans as part of the acquisition strategies.

In essence, bridging enables you to finance auction property within relatively short timeframes.

Many auction buyers, for example, use bridging to initially fund the quick purchase of an unmortgageable property.  The objective here is to refurbish and either sell for profit or refinance to a longer-term mortgage product (and benefit from long-term capital gain and income growth).

However, with more sellers embracing auctions as a more efficient way to dispose, we’re seeing all kinds of properties coming to market.  Many buyers look to bridging finance as it’s often the only way to secure the property within tight deadlines.

In most cases, the finance will be secured either against the property you’re looking to buy or existing assets (assuming there is a sufficient equity ‘buffer(s)’).

This is known as a ‘first charge’.  The solicitor places a legal restriction on the Title Register (Deed) at HM Land Registry.  The lender has this in place to have tangible security in the property.  Should you, as the borrower, fail to meet any obligations, they can also take possession of the property.

Auction Bridging Basics…

You will forward a Decision In-Principle (DIP), sometimes known as an Offer in Principle. This means that the bridging lender will pre-qualify you (or the associated buying company) so that you can bid on auction properties with confidence.

The amount you can borrow can vary (with reason) in line with the ebbs and flows of the auction bidding process.  This involves a primary loan with a contingency proviso which would allow you to bid higher at auction (should you wish to).

Should you win the auction property, you can confidently pay down the 10% deposit at the fall of the gavel.  The fast turnaround of finance means the bridging lender will guarantee the funds between the immediate exchange of contracts and completion.

What Types of Property Can You Buy with Auction Bridging Finance?

Property buyers use bridging finance for a range of purposes including:

  • Single let buy to let properties;
  • Houses of Multiple Occupation (HMOs) / multi-lets / studios;
  • Mixed-use / commercial / industrial / semi-industrial property;
  • Land sites / plots (with and without planning permission / Permitted Development Rights);
  • Buildings that are normally considered ‘unmortgageable‘ – such as inhabitable or problem properties that need extensive refurbishment / structural works, non-standard construction, high-rise flats and ex-council houses.

Some even have bought off-plan properties sold at auction using bridging.

Auction Bridging Finance Can Be Used to Buy a Range of Different Property Assets

Why Take Out Bridging Finance for an Auction Purchase?

Property auctions remain one of the best ways to buy UK housing stock at competitive prices.

However, as a buyer, getting access to large sums of money within the required timeframes is not always easy.

You may have a limited budget and cannot afford to pay 100% cash or have capital deployed into other projects.  Or, perhaps you’re cash-rich but would like to leverage your funds more efficiently.

The most prominent downside is the pay rate and associated costs involved.  However, working with the right broker with a firm grip on the market as a whole enables you to access some great products.  You can also offset many of the costs against your eventual tax liabilities.

Furthermore, although buying with cash will save you funds, there is often an opportunity cost for holding capital.  Using auction finance (in a safe manner) can mean, in theory, you can get buy more properties and make better margins.  The net costs are also notably cheaper than working with a cash property buyer / investor or joint venture partner.

The Auction Bridging Application Process

Given the time-sensitive nature of auctions, it’s crucial to have all your ‘ducks in a row’.

Some of the steps that will need to be followed include:

  • Providing certified personal identification – including residential address, DOB etc.;
  • If the target auction property is being bought within a company – providing the full name, Companies House number, address etc.
  • Providing details necessary for credit checks;
  • Forwarding information on the property (full address, typology, condition, defects);
  • Forwarding the auction sales particulars / listings;
  • Passing on any surveys that you may have access to;
  • If the project looks complicated, the lender will want information about your experience;
  • Broadly outlining of plans with the property.  This could include: buy to let, buy to sell, seeking full or outline planning / permitted development rights etc.;
  • Complementing the above, providing an exit strategy for the property – i.e. how will the auction finance be repaid;
  • Providing schedule of works / refurbishment plans;
  • Giving evidence of the property valuation (scroll below to request one of our reports) and evidence of saleability / rentability / mortgage agreement in principle;
  • Forwarding the auction legal pack (although this is often not a requirement);
  • Where necessary, providing information on other properties you wish to securitise (address, mortgage lender / first charge information).  This assumes that you will not be using the proposed property purchase as security;
  • Whether you are planning to sell any buy-to-let properties (including portfolios) and the associated details;
  • Proving that you have the deposit available (including confirmation it’s from a legitimate source);
  • If the funding is coming from a joint venture partnership, proving that you’re adhering to PS13/3 regulation under the Financial Conduct Authority (FCA);
  • If the bridging funds will be used for a commercial property purchase, more details will usually be required.

Flowchart on the Auction Finance Process

Flowchart on the Auction Bidding ProcessFlowchart on the Auction Bidding Process

Auction Bridging Criteria

They can then field out the proposition to a variety of bridging lenders.  This assures you’ll be attracting the best possible terms and rates.

Please note that each auction finance provider has different appraisal (underwriting) criteria, minimum rates, appetite to lend and geographical focus.

However, you can rest assured that our recommended auction finance providers have the necessary experience in dealing with these types of sale.  It’s also worth noting that you’ll be accessing the most competitive rates.

In many cases, you will get a decision back in a few hours.

Check the Extra Auction FeesAlthough our auction broker partners will highlight everything you’ll need to know, be sure to calculate associated costs including surveys, arrangement and/or admin fees (as well as the monthly / rolled up interest payment).  If you’re selling any existing properties, there may be additional costs to consider.

Speak to Our Auction Finance / Mortgage Advisors

Please fill out the form below and a mortgage advisor from our partners at DNA Financial Solutions will be in touch for a no-obligation chat:

DNA Auction Finance Brokers

Auction Finance Legals

Once the lender confirms the indicative terms of auction finance (i.e. the valuation report is accepted), your appointed solicitor will need to draft a mortgage deed for your witnessed signature.

Note that you will not be tied into this agreement say, for example, you do not win the auction.

It’s worth noting that this process is unrelated to accepting the terms and conditions of the auction sale.  The auction finance provider may also require an insurance policy to be in place.

Property Auction Finance Legals

Do You Need to Have a Good Credit Rating to Use Auction Finance?

It’s preferable to have a decent credit score as you’re borrowing a significant sum of money.  However, bridging lender underwriting processes are different from those of standard mortgage lenders and will take a more commercial approach.

Much comes down to the quality of the deal, in particular the property’s valuation and surrounding circumstances of the sale.

The bridging lender, for example, may see that there is a sufficient amount of equity and be willing to advance the funds.  Others may require a larger deposit or that you bring in a joint venture partner or guarantor (in addition to taking the first charge on the property).

It stands to reason that the more money you’re willing to put into the deal (so-called ‘skin in the game’), the better rates and terms you can access.

Note that there are bridging lender options if you are non-status, a foreign resident, self-employed, or have never bought a property before.

Your Credit Rating When Applying for Property Auction Finance

Regulated and Unregulated Bridging Lenders – What’s The Difference?

The principal difference is that regulated bridging lenders are held accountable by the Financial Conduct Authority (FCA).  A crucial condition is that the loan will only be approved if the borrower will reside within 40% of the property.

For the purposes of property (real estate) auctions, most bridging loans are therefore likely to be unregulated.  This also means that there is much less red tape relative to buy-to-let and other longer-term mortgage options.

Current Bridging Rates (Auction Property)

We always recommend using a broker in order to access ‘whole of market’ options.

An industry professional will also build a tailor-made solution based on the transaction and your particular financial situation.

Checklist when exploring auction bridging companies:

  • The headline rate and what fees may or may not be included;
  • Arrangement fees;
  • What are the loan to value terms?
  • What security is acceptable?
  • Entry and/or exit fees;
  • What’s the minimum term of the loan (for example, be wary if the term is 6 months but you may only need it for 3);
  • Is there a minimum loan requirement?  For example, some bridging lenders would not lend anything below £50,000;
  • Would a RICS valuation be necessary (there could be practical issues if so)?  Many would be happy with a desktop valuation, undertaken by an approved surveyor;
  • Would there be any broker fees to add on to the costs;
  • What kind of security would the bridging lender require? Most would want a 1st charge on the asset you’re looking to buy.  Alternatively, you could use other properties you own with sufficient equity as collateral;
  • What are the survey costs?
  • Can the auction bridging lender provide evidence of timelines being met?
  • Would the bridging lender’s be covered by them?
  • What would be the requirements for solicitors?  Some bridging lenders require regulated you to use their associated legal teams and only firms that have a minimum of 2 or 3 partners;
  • What are the Early Redemption Charges (ERCs);
  • What kind of exit plan(s) is the bridging company expecting.

Paying Back Your Bridging Loan

In most cases, you will need to pay back the auction bridging loan in one of 2 ways:

Monthly – similar to a typical interest-only mortgage, you’ll pay the interest on a monthly basis, with the full debt at the end of the term;

Rolled Up – the lender will add the total interest is cumulatively at the end of the term.

Paying Back Your Property Auction Bridging Finance Loan

Refinancing Auction Property

Despite the advancements in processing mortgage finance applications, it remains very difficult to purchase a property at a traditional 28-day auction.

Especially with high street (mainstream) buy-to-let lenders, the challenge comes down to the drawn-out processes that come with mortgage applications (surveys, conveyancing searches underwriting assessments, approvals).

With auction properties requiring exchange of contracts (effective transfer of legal ownership) at the fall of the hammer, it’s practically impossible to organise finance in time.

Some regular auction buyers, however, use a pre-existing asset-backed drawdown facility with the lender.  Here, the borrowers secure the loan against other properties within their portfolios.  This means they have the ability to confidently bid on properties and have the finance arranged in good time.

Here at Property Solvers Auctions, some of our seller clients choose the 56-day modern method approach.  This requires the exchange of contracts to happen 28-days after the fall of the auction hammer.  Completion must then happen 28 days after that.

This provides a sufficient amount of time to organise mortgage finance for the purchase.  It also potentially eliminate the need to take out bridging finance.

Note that both 28 and 56-day auctions require payment of a 10% deposit of the purchase price.  This is usually due within 24 hours of the hammer fall (exchange of contracts).

Buy-to-Let Mortgage Refinancing

Although you may decide to sell the property (if you’re adopting a ‘flipping’ strategy, for instance), many auction buyers look to refinance at some point after completion.

With bridging loans generally being between 3 and 12 months at quadruple the amount, it makes financial sense to seek out a more competitive pay rate through a mortgage lender.

A common example of this is the BRRR (Buy > Refurbish > Refinance > Rent) strategy.  In other words, the property is purchased (usually in a dilapidated state) using a bridging loan, refurbished (using the buyer’s own or borrowed funds), refinanced with a suitable buy-to-let lender and rented out for long-term income.

This form of lending has evolved considerably in recent years and will involve rental stress tests.  This means that, provided your costs are in check, you may be able to pull back out your invested capital.  However, expecting to execute a ‘no money down’ transaction using this strategy is highly unlikely and, indeed, will be resisted by most lenders.

We also strongly recommend seeking professional tax advice, particularly if you are purchasing property in your own name (as opposed to a corporate entity).

Bridge to Let (for Auctions)

Growing in popularity in recent years is the ability to use one provider for a bridging loan to fund an unmortgageable property.  The aim is then to refinance on a buy-to-let basis once the works are complete (i.e. exit the bridging finance) with the same lender.

It provides borrowers with a level of comfort as you move forward with the purchase with the knowledge that the buy-to-let loan is effectively securely in place (bar certain circumstances).

The lender will typically take a hands-on approach and will want to know about specific plans with the property and request a schedule of works.

Essentially, they will need to be sure that you’re adding sufficient value to the property and will remain within the permissible lending parameters.

However, the use of this finance mechanism may be tricky in auction scenarios as there may be logistical issues with accessing the property for surveys and other requirements set out by the lender.

Bridge to Let

Commercial Mortgage Finance (for Auctions)

Similar to buy-to-let financing, although many auction houses (including ourselves) do offer a longer period for unconditional sales  – typically 6 weeks – it’s usually an insufficient amount of time to organise things.

This is because commercial property lenders have a number of extra due diligence factors to consider.  This includes lease agreements and associated covenants, trading figures, asset + liability / balance sheet statements, business plans.

Development Finance Loans (for Auctions)

This type of finance is not exclusively available for existing developers with a proven track record.

However, if you have an interesting project, prospective sellers may well be willing to discuss progressing in collaboration with the lender.

Speak to Our Auction Finance / Mortgage Advisors

Please fill out the form below and one of our auction finance partners will be in touch for a no-obligation chat:

DNA Auction Finance Brokers

Frequently Asked Questions

Unless you have a pre-agreed auction mortgage facility in place, it’s very difficult to obtain finance within traditional auction deadlines (typically 28 days).

For this reason, many auction buyers seek out auction bridging finance. Despite the higher cost, these finance providers are well-accustomed to working to tight timeframes and you will not have to jump through as many hoops relative to obtaining a mortgage.



Yes, by and large, you will be paying more interest when using auction bridging finance.

This is because auction finance is more of a temporary solution to “plug the financial gap” and complete the property sale within the auction house’s deadlines.

Whilst you will be paying a high level of interest, most auction buyers will then swap over to more competitive rates – typically with a buy-to-let mortgage lender – after the purchase and refurbishment.  Others sell the property for a profit.


Most auction finance (bridging) terms are set at a minimum of 3 months.

This means that, even if you complete the refurbishment or sell on the property within this period, you will still have to pay the full amount.

Typically, you can expect to pay up to 1% per month (12% per annum).

Much, however, will depend on how much capital input (so-called “skin in the game”) there is.  For example, the pay rate is likely to be lower if you are 50% of the purchase price as a deposit – relative to 70-75%.

Remember to account for surveys, loan arrangement and/or admin fees (alongside the normal buying costs).

These days, deposit requirements are usually set at a minimum of 25%.

Much will depend on the financial merits of the transaction and the lender’s appetite for risk.  Generally, also, the more unusual types of property require higher deposits.

Much will depend on which auction finance lender you work with and your objectives with the property.

Most auction buyers looking to buy-to-sell (i.e. flip) the property taking out a loan will usually agree to a minimum 6-month term.  This is because of the specific rule imposed by most mortgage lenders that require ownership for this period of time.  Note there are long terms lenders that will overlook this mandate.

If you’re looking to refurbish the property for rental (buy-to-let) purposes, you may want to consider an auction bridge-to-let product where there’s often more flexibility in terms of repayment of the initial loan.

There is no difference between auction and bridging finance and it really comes down to how these funding mechanisms are labelled.

The idea is for buyers to have the finance in place to meet the tight deadlines required within short timeframes – whether that would be through auction or other form of quick / private sale.

It’s also worth mentioning that much of the reason that the bridging (or “flash finance”) sector emerged was due to the growth of the auction space.

Property Solvers Auctions is neither…

We work with a leading auction finance / mortgage brokerage with whole of market access in order to assist our buyer clients to access the very best funding options.



It’s entirely your choice if you wish to approach an auction bridging company directly.  Most would be willing to discuss things with you directly and you will also save on the brokerage fees.

At the same time, using a brokerage with the correct systems in place to do the research on the best products based on your circumstances can be hugely advantageous in terms of finding what works specifically for you.  They can, for example, pit one auction finance company against another in order to negotiate you the best possible deal.

Yes – in fact – we generally recommend it.

With the Section 24 legislation now fully rolled out for buy-to-let investors, owning rental property in your personal name can trigger massive tax bills – particularly if you’re in the higher income tax bracket.

We would generally suggest setting up Special Purpose Vehicles (SPVs) for the acquisition and mechanism for the property auction finance.  This is because using a trading company will often lead to extra questions and due diligence which, for the purposes of speed and efficiency, are best avoided.

Yes, it’s entirely possible.

Repossession auction properties are typically sold under traditional 28-day sale conditions.  This provides buyers with plenty of time to get the necessary finance in place.

Yes, absolutely…

However, if you are planning to use the property auction loan for a normal house purchase, it’s probably better to take out long-term mortgage finance as you will save a huge amount.

Yes, many auction purchase funders cater to properties that are not exclusively residential.

Note that the due diligence and auction finance underwriting processes tend to be more detailed. Preparation is therefore key.

For this reason, most auction house terms and conditions (including ourselves) have extended completion periods for these kinds of property sales.


The credit assessment process for auction financing is a lot less stringent relative to seeking out a mortgage.  This means that securing funding is a lot easier.

At the same time, it’s important that you have a good idea of what your exit strategy is.  If you struggle to obtain mortgage finance (buy-to-let or otherwise), you do not want to be stuck on an onerous bridging terms.

A good broker can advise you accordingly.

Yes, this is possible.

However, it’s worth making sure that the terms are competitive relative to taking out auction bridging finance.

You may also find that the underwriting / administrative process of using a business loan to finance an auction property will be longer.

Yes, provided your bank or building society has no objection to it, this should not be a problem.

Please be careful not to over-expose yourself – particularly as you will have to pay overdraft fees in addition to the auction finance costs (which, remember, are notably higher relative to standard / buy-to-let mortgage pay rates).

We would strongly advise against this…

Although many credit card companies may lure you in with competitive rates, it’s all too easy to fall into the trap of high APRs and onerous penalties if you do not meet your obligations.

Furthermore, many auction finance lenders would not allow buyers using credit cards to proceed.

In most cases no, as most online auction houses (including ourselves) deploy Royal Institute of Chartered Surveyors (RICS) Common Auction Conditions, there should be no difference.

Please be sure to read through the auction terms and conditions in good time.  The auction finance company / broker will almost certainly request this information.

Yes, there is certainly more flexibility compared to standard mortgage finance.

Note that the auction finance lender will need to verify the credentials of the joint venture partner as, in most cases, they effectively have the same responsibilities as yourself.

For this reason, it’s worth making sure you have everything well-prepared in good time.

Much will depend on which auction house and whether the sale is under 28 or 56 auction conditions (or a variation of these timescales).

Assuming the property is being sold as a 28-day sale (which is often the case), as a buyer, you will need to have 10% of the purchase price ready once the hammer falls.  This will be due (alongside any reservation fee) straightaway.  You will then have a further 28 days to complete the sale (i.e. have all the auction finance in place to pay the full price).  With 56-day sales, there is an extension of 28 days to exchange contracts after the hammer falls.

Please be sure to check the general terms and conditions in addition to the Special Conditions of Sale.

In many cases, yes – however you may be able to negotiate down this price or incorporate it into the arrangement fee.

Yes, to a degree.

However, it’s worth noting that auction finance brokers often have access to specific products that are not always possible to find by searching online for example.

Complete the form at the top of this page or email us at [email protected] and we would be more than happy to respond to any questions you have.

Please also check out our general Frequently Asked Questions.