Why buying at auction is different
When you buy a property at auction and the hammer falls, you've exchanged contracts immediately. You typically pay a 10% deposit on the day and must complete the purchase within 28 days.
This is categorically different from a standard property purchase, where you might have weeks or months between agreeing a sale and exchanging contracts. The 28-day window means you need to have your finance arranged — or at least well advanced — before you even walk into the auction room.
A standard residential mortgage takes 8–12 weeks. That's 2–3 times the window you have. This is why bridging finance is the standard tool for auction property purchases.
Most property auctions use the standard RICS general conditions of sale, which specify a 28-day completion period from the date of auction. 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
Some conditional auction sales (increasingly common in online auctions) allow longer completion periods, but the principle — bid to win, then complete fast — remains the same.
What is auction finance?
"Auction finance" is simply a bridging loan arranged specifically for a property auction purchase. It works exactly like any other bridging loan — secured against the property, with interest rolled up and repaid when you sell or refinance — but the emphasis is on completing the transaction within the 28-day deadline.
Auction bridging loans typically have the same terms as other bridging loans: 1–24 month terms, up to 75% LTV on residential property, with interest from 0.79%/month.
Step 1: Arrange finance before you bid
The biggest mistake first-time auction buyers make is assuming they'll arrange finance after winning. By that point, you have 28 days — and the clock is already ticking.
The right approach is to contact a bridging lender before the auction. At AF Credit, we can:
- Review the lot details (address, guide price, property type)
- Run an initial AVM check where eligible
- Confirm our appetite and provide indicative terms before auction day
This means you walk into the auction room knowing exactly what finance is available, at what rate, and on what terms. You can set a confident maximum bid — not a hopeful one.
Step 2: Do your due diligence on the lot
Before bidding, you should review:
- The legal pack — available from the auction house, this includes title documents, searches, special conditions of sale, and any known issues. Read it, or have a solicitor read it, before bidding.
- The property — visit if possible. Understand the condition, any planning history, and what works (if any) are needed.
- The guide price vs reserve — the guide price is indicative. The reserve (undisclosed) is the minimum the vendor will accept. Prices can go well above both.
- Comparable sales — understand what comparable properties in the area have sold for to know whether you're buying at a fair price.
Step 3: Auction day — what happens
On auction day, you'll need:
- Proof of identity (passport or driving licence)
- Your deposit funds — 10% of the purchase price, immediately payable on winning. This must come from your own funds (not the bridging loan).
- Solicitor details — you'll need to provide these to the auction house on the day
When the hammer falls, contracts are exchanged immediately and the 28-day clock starts. Contact your bridging lender the same day to trigger the formal application.
Step 4: From auction day to completion
A good auction bridging lender will move quickly once you've won. At AF Credit, our typical timeline after auction day is:
- Day 0 (auction day): Notify us, submit formal application
- Day 1–2: Valuation instructed (AVM where eligible, or physical survey instructed immediately)
- Day 3–5: Formal offer issued (subject to valuation and legal)
- Day 3–5: Solicitors instructed by both sides
- Day 7–14: Legals completed and funds released
On eligible properties with AVM or desktop valuation, completion in 5–7 working days from auction day is achievable. Physical valuations on complex lots add time — but we instruct the panel immediately to minimise this.
Step 5: Repaying the auction bridge
Your exit strategy should be agreed before you bid. Common exits for auction purchases:
- Sell the property — if you bought to flip, once works are complete and the property is on the market, the bridge is repaid from sale proceeds.
- Refinance to buy-to-let mortgage — once the property is habitable and tenanted, refinance onto a standard BTL mortgage.
- Refinance to residential mortgage — if you intend to live in the property, refinance once it meets standard mortgage criteria.
- Refinance to commercial mortgage — for commercial auction lots, refinance once the property is stabilised.
Types of auction lots and how they affect finance
Standard residential lots
The most straightforward to finance. Up to 75% LTV, AVM or desktop valuation available on eligible properties, fastest completion timelines.
Uninhabitable or derelict properties
Very common at auction. Standard mortgage lenders won't touch these, but bridging lenders will. Physical valuation usually required. Exit strategy is typically renovation followed by refinance or sale.
Commercial lots
Offices, retail units, warehouses — typically up to 65% LTV. Physical valuation required. Legal complexity can be higher. Speak to us about the specific lot before bidding.
Mixed-use (semi-commercial) lots
Shop with flat above, etc. Up to 70% LTV. Physical valuation required. We have genuine appetite for this asset class.
Conditional auction sales
Some online auction platforms use conditional sales with longer completion windows (often 56 days or more). This is more compatible with standard mortgage timescales, though bridging is still frequently used for flexibility.
AF Credit can confirm appetite and provide pre-auction indicative terms on most lot types — within hours of you sharing the details. Don't bid without knowing what finance is available.
Get pre-auction termsCommon auction finance mistakes
- Bidding without pre-arranged finance — the most common and most costly mistake
- Not reading the legal pack — restrictive covenants, planning issues, or missing consents can make a property impossible to mortgage or sell
- Underestimating works costs — if your exit is refinancing once works are complete, get quotes before you bid
- Not having your deposit funds immediately available — the 10% must be paid the same day, from your own funds
- Choosing a slow lender — some lenders advertise auction finance but can't actually complete within 28 days. Ask for evidence of recent completions.
If you fail to complete within 28 days (or the specified period), you will forfeit your 10% deposit. The vendor can also pursue you for additional costs and losses. This is why having pre-arranged finance before bidding is so important.
In theory, yes — but in practice, very rarely. Standard mortgage applications take 8–12 weeks, which is well beyond the standard 28-day completion window. The only scenario where a mortgage might work is a conditional auction with a 56+ day completion period and a property in good condition that meets standard mortgage criteria.
You need 10% of the purchase price available on auction day — this is paid directly at the auction and is not covered by the bridging loan. The bridging loan then funds the remaining 90% (less any arrangement fee or retained interest). So if you're buying a £200,000 property, you need £20,000 available on the day, and a bridging loan of up to £150,000 (75% LTV).
Yes. You should have a solicitor review the legal pack before you bid — to identify any issues that might affect your ability to finance, use, or sell the property. You should also have your solicitor's details ready on auction day, as you'll need to provide them immediately when you win.