Why buying at auction is different
Unlike buying through an estate agent, the moment the auctioneer's hammer falls you have exchanged contracts. In most cases, you must complete the purchase within 28 days.
For many first-time auction buyers, a standard mortgage simply cannot be arranged quickly enough. A conventional mortgage takes 8–12 weeks — two to three times the window you have. That is where auction bridging finance comes in.
Most property auctions use the standard RICS general conditions of sale, which specify a 28-day completion period. If you fail to complete within this window:
- You forfeit your 10% deposit
- The vendor can re-list or sell the property to another buyer
- You may face a claim for additional costs and losses from the vendor
What is auction finance?
Auction finance is a short-term loan designed to help buyers complete a property purchase within the strict deadlines imposed by auction houses. It is commonly used where:
- A mortgage would take too long
- The property requires refurbishment
- The property is unmortgageable in its current condition
- The buyer intends to refinance later onto a standard mortgage or buy-to-let product
- The buyer plans to renovate and sell
Once the purchase has completed, borrowers typically repay the bridge by selling the property or refinancing onto a conventional mortgage.
Can a first-time buyer get auction finance?
Yes. Many people assume bridging loans are only available to experienced developers, but that is not the case.
AF Credit regularly considers applications from first-time buyers and first-time investors, provided there is a sensible exit strategy, suitable security, a realistic loan amount and a property we are comfortable lending against. Experience helps, but it is not always essential.
Why mortgages often don't work at auction
Traditional mortgage lenders typically require a full valuation, detailed income and affordability checks, and several weeks of legal work. Auction contracts usually require completion within just 28 days — a timeline that is almost impossible to achieve with a standard mortgage.
| Feature | Standard mortgage | Auction bridging loan |
|---|---|---|
| Completion time | 8–12 weeks | 5–10 working days |
| Underwriting basis | Income-led | Asset-led |
| Unmortgageable properties | Usually declined | Often accepted |
| Loan duration | 25+ years | 1–24 months |
Before you register to bid
The biggest mistake first-time buyers make is arranging finance after they've won the property. Instead, you should:
- Review the legal pack
- Understand the property's value
- Confirm your maximum budget
- Obtain indicative finance terms
- Calculate all purchase costs
- Decide on your exit strategy
Entering the auction with finance already discussed significantly reduces your risk. At AF Credit, we can confirm appetite and issue indicative terms within hours of receiving lot details.
How much deposit do you need?
Most auction houses require a 10% deposit immediately after the hammer falls. This must come from your own funds — the bridging loan covers the remaining balance, not the deposit.
You will also need to budget for:
- Stamp Duty Land Tax
- Buyer's premium (where applicable — check the special conditions)
- Legal fees
- Survey costs (if a physical valuation is required)
- Bridging loan arrangement fee and interest
- Refurbishment costs and a contingency budget
- Buildings insurance (arrange on the day of purchase)
- Deposit on the day: £15,000
- Bridging loan (75% LTV): £112,500
- Stamp Duty (first residential property): £500
- Legal fees (approx): £1,500
- Arrangement fee (1.5%): £1,688
- Interest (6 months at 0.9%/month): £6,075
These figures are indicative only. Every case is assessed individually.
Common properties bought by first-time investors
Auction finance is frequently used to purchase properties that wouldn't suit a standard mortgage: houses requiring renovation, vacant flats, buy-to-let investments, HMOs, mixed-use properties, commercial buildings, development opportunities and land with planning permission.
Can I buy an unmortgageable property?
Yes. Many auction lots cannot obtain a traditional mortgage because they have issues such as:
- No kitchen or bathroom fitted
- Damp or structural movement
- Short or defective lease
- Non-standard or PRC construction
- Japanese knotweed
- Missing building regulations or FENSA certificates
- Spray foam insulation
- Fire safety issues
Bridging lenders assess these differently from mainstream mortgage lenders. See our full guide on unmortgageable property bridging loans for more detail.
The auction buying process
Exit strategies
Every bridging loan requires a clear exit. Typical exits for auction purchases include:
- Sell the property — once renovation is complete and the property is sold
- Refinance to a buy-to-let mortgage — once the property is habitable and tenanted
- Refinance to a residential mortgage — if you intend to live in the property
- Refinance to a commercial mortgage — for commercial auction lots once stabilised
- Sale of another asset — using proceeds from another sale to repay the bridge
Know your exit before you bid. If you are uncertain about refinanceability after renovation, speak to a mortgage broker before the auction.
AF Credit can confirm appetite and provide pre-auction indicative terms on most lot types — within hours of you sharing the details. First-time investors are welcome.
Get pre-auction termsMistakes first-time buyers make
The free auction buyer's checklist
Use the checklist below before every auction purchase. Tick each item before you place a bid.
Before the auction
Property checks
Legal pack
Finance and auction day
After winning
The 15 most common reasons buyers lose their deposit
Most failed completions are avoidable. Here are the mistakes that cost buyers the most.
- 1. Didn't arrange finance beforehand
- 2. Bid above their budget
- 3. Didn't read the legal pack
- 4. Ignored restrictive covenants
- 5. Missed completion deadlines due to slow finance
- 6. Underestimated refurbishment costs
- 7. Assumed a mortgage would be approved
- 8. Didn't account for Stamp Duty
- 9. Missed or misread special conditions
- 10. Chose the wrong (slow) solicitor
- 11. Delayed submitting documents to the lender
- 12. Didn't arrange buildings insurance immediately after purchase
- 13. Overlooked lease defects
- 14. Failed to budget for all fees
- 15. Had no realistic exit strategy
Yes. Many people assume bridging loans are only available to experienced developers, but that is not the case. AF Credit regularly considers applications from first-time buyers and first-time investors, provided there is a sensible exit strategy, suitable security and a realistic loan amount.
Yes — temporarily. Bridging finance is designed for exactly this situation. Once the purchase has completed, borrowers typically repay the bridge by selling the property or refinancing onto a conventional mortgage or buy-to-let product.
Yes. AF Credit lends to SPVs, limited companies, trading companies and trusts as well as individuals. This is a common structure for property investors for tax planning purposes.
Yes. Bridging finance is frequently used for properties requiring refurbishment. The key is having a clear exit strategy — typically renovation followed by sale or refinance onto a standard mortgage or buy-to-let mortgage once the property is habitable and tenanted.
Often within 5–10 working days on eligible residential properties. AF Credit provides same-day indicative terms and can use AVM or desktop valuations on eligible properties, removing the need for a physical survey and significantly accelerating completion.
You may lose your 10% deposit and face additional contractual penalties. The vendor may also pursue you for losses suffered on a re-sale at a lower price. Arranging finance before auction day — with a proven direct lender — is the best way to avoid this risk entirely.