Auction Finance

If you need to arrange financing quickly to purchase an auction property, it is possible to secure funding within tight timeframes with the right support. In this guide we outline what auction finance is, how it works, give examples of UK lenders that offer it, and show where to find the best rates and terms for your property purchase.

What is auction finance?

This is a short-term funding option designed to help buyers complete property purchases quickly, typically within 14 to 28 days after the hammer falls at an auction. It is most commonly used by property investors, developers, or landlords who need financing faster than a standard mortgage application process would allow.

How does it work?

It operates much like a bridging loan but is tailored to the time pressures and conditions of property auctions. Once the property is secured, the auction finance loan is repaid later by selling the property, refinancing, or taking out a longer-term loan.

The process can be straightforward. Once you have identified a property and have an estimated guide price, you can apply for auction finance in principle before the auction date. This way, you can make sure that on the day of the auction, funding is ready to go.

Lending criteria for financing an auction property

Each lender will set its own criteria, but these are the main factors they will assess before approving auction property finance:

• Deposit and loan-to-value (LTV): Auction finance usually allows borrowing up to around 75% of the property’s value (sometimes more with a strong case). You will typically need to provide the remaining 25% yourself.
• Exit strategy: Lenders place significant weight on your exit plan—how you will repay the loan at the end of the term. Common exits include refinancing with a buy-to-let or commercial mortgage, or selling the property after refurbishment.
• Property type and condition: Most auction finance lenders consider a wide range of property types, including those classed as “unmortgageable” by high street banks. However, severe structural defects or specific planning issues may trigger extra checks or reduce the maximum LTV.
• Borrower experience and credit: First-time buyers can apply, but lenders tend to favour experienced investors or developers. Bad credit is not necessarily a barrier, though it may narrow your lender options or affect the rates offered.
• Location and value: Properties in stable, high-demand areas are generally easier to finance. Lenders will require detailed valuations and will factor in local resale or rental potential as part of their risk review.

How to get auction property finance

Securing auction finance swiftly and efficiently can determine whether a purchase succeeds. To maximise your chances of a smooth, successful application, follow these steps:

1. Work with a specialist broker: Brokers who understand property auction timelines can connect you with fast-moving lenders capable of releasing funds quickly.
2. Get a decision in principle: Your broker can arrange this—even if you end up using a different lender—as it provides a funding framework so you know your limits before the auction.
3. Have your paperwork ready: This includes ID, proof of income or assets, property details, and your exit plan. Your broker can advise on the most suitable exit strategy.
4. Apply for finance: Once your broker has matched you with the best lender for your goals, they will guide you through the rapid application and completion process.

UK auction finance lenders

Because this is a relatively niche type of finance, the most suitable lender will depend on your circumstances. That said, here are some UK lenders that are open to funding an auction property:

• Together: Completion can be achieved in as little as 24 hours, there are no lender legal fees, and desktop valuations are available.
• Precise Mortgages: Provides auction bridging finance with terms from a minimum of 1 month up to 12 months (or 18 months for non-regulated mortgage contracts).
• LendInvest: Can deliver funding within the typical 28-day auction window. Terms run up to 12 months, and borrowing of up to 85% LTV may be possible.

If you want to compare today’s most competitive rates and find a lender that fits your timeline, you can arrange a free, no-obligation chat with an auction finance broker here.

How do the rates compare to bridging loans?

Auction finance rates are generally in line with bridging loan rates, as both are short-term secured lending. However, auction finance may be priced slightly higher due to the required speed of completion and the perceived additional risk.

Frequently Asked Questions