bridging loans

Auction Finance and Bridging Loan

Specialist Bridging Loan Broker Since 2004.

When you buy property at auction, including commercial property, once the hammer has fallen, you have to pay for your purchase within a certain time frame, typically 28-30 days.

Auction Bridging Loan: Finance For Buying Auction Property.

When you buy property at auction, including commercial property, once the hammer has fallen, you have to pay for your purchase within a certain time frame, typically 28-30 days.

Traditional forms of borrowing e.g. mortgages, bank loans etc, take too long to arrange in such a short space of time.

So, if you need an auction bridging loan, speak to Tiger Financial today and let us help you broker auction finance for your next property purchase.

Please note: the difference between an open bridging loan and a closed bridging loan is simply whether there is a guaranteed exit from the bridging loan; in other words, if there is a simultaneous exchange and completion of a sale on the day the bridge loan completes. The application process for an open and a closed bridging loan is the same regardless.

Financing auction purchases

In the UK, when you purchase property at auction, successful bidders need to put down 10% of the purchase price as a deposit as soon as the auction is over. You then have to pay the outstanding amount in full, within 28-30 days.

But this short time frame restricts the type of finance you have access to – most mortgages and high street loans take longer to arrange and finalise.

An auction bridging loan is a niche type of short term finance that is fast and easy to apply for. It’s designed specifically for property developers and investors who buy properties at auction, giving you the cash you need to complete your purchase quickly.

What is auction finance bridging loan?

Auction bridging loans are a specialist finance solution, a type of short term bridging loan which enables you to buy a property at auction and still complete within the standard 28 day completion period.

Auction finance is not:

  • Buy-to-let mortgage funding, or
  • A mortgage in its own right.

Auction bridging loans are typically even faster to arrange than regular bridging finance. Which is why they’re the popular choice for property developers buying at auction.

They’re a short term, high interest loan giving you access to funds, fast. A lender will lend you money – in as little as 14 days of application (provided you have enough deposit and a clear exit strategy).


Like most bridging loans, auction bridging loans tend to be interest only where the interest is rolled up and repaid in full, with the rest of the loan, at the end of the loan period. They don’t typically require monthly repayments like mortgages.

Most lenders expect repayment within 1-24 months. Saying that, some bridging loan lenders will allow you to borrow for up to 36 months, if necessary.

What you need to know about auction bridging finance.

Auction bridging loans are also known as an auction loan or auction finance. They’re just like regular bridging loans, except they’re specifically designed to help buyers raise funds quickly, when purchasing property at auction.

Auction finance lenders assess eligibility based on numerous factors, including:


To take out a bridging loan, most lenders will require you to put down a minimum deposit of between 10-25%.

Putting down additional deposit monies can increase your chances of securing a better (lower) interest rate.

If you can’t put down the requisite amount of deposit money, you might be able to use security in the form of another asset e.g. a property with a similar value.

Credit history

The cleaner your credit history, the better your chances are of securing a lower interest rate.

That’s not to say that you can’t access auction finance if you have a poor credit rating, far from it. It just means that you might not be eligible for the lower rates.

Prior experience

Lenders aren’t looking for you to be the next Phil Spencer, you can still access auction finance even as a first time buyer.

But, if you do have prior auction experience, or you have purchased similar properties before, it can boost your credibility in the eyes of lenders.

Exit strategy

The exit strategy is your plan for paying off the debt at the end of the loan term. It’s how the lender will get their money back, and it’s one of the key details in determining your eligibility for a loan.

Mortgaging, refinancing, or selling the asset are typically the exit plans of choice for loans involving land or property.

To prove that you have a viable exit strategy in place, most auction finance lenders like to see either evidence of the property’s saleability or your plan for a longer term financial arrangement i.e. a mortgage agreement in principle.

Arranging Property Auction Finance.

There are two payments auction buyers make when purchasing property at auction :

  1. Deposit or reservation fee. On the day of the auction, you’re obligated to pay a deposit, typically 10% of the price of the property. Or a reservation fee, roughly 2-4% of the purchase fee, plus VAT.
  2. Outstanding balance and fees. On completion day, usually 28-30 days after the auction (each lot will have its own completion deadline), you will be required to pay the remainder of the balance for the property, plus fees.

If you’re using bridging finance to purchase property at auction, we advise clients to identify properties they’re interested in a few weeks prior to auction day, so that bridging lenders can prepare an indicitivate offer, should your bid be successful.

Because as soon as the gavel strikes, the clock starts ticking.

The Sales of Goods Act 1979 says: “A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in other customary manner”.

Meaning property auctions are legally binding from the moment the gavel falls in the auction house.

At this point, you have officially exchanged, and both you (as the buyer) and the seller are legally committed to completing the property purchase.

Tell us as soon as you’ve won the auction and we will get your application underway for auction finance immediately.

Auction finance costs

Up until this point, you’ll likely have not paid anything.

But now, it’s going to start costing you:

Valuation report fee

Once your loan application goes to formal underwriting, you will be required to pay a valuation report fee to the lender – generally between £400-600 for properties up to £500,000.

This is because the loan is offered and secured against the value of the property you’re purchasing. The lender needs to know that in the event of you defaulting on your repayments, and they need to take possession of the property, it has the value required to cover their debts.

Lender's legal fees

If your application is approved, the lender will make you a formal loan offer. If you accept this offer, you will be liable for paying the lender’s legal fees – these can be around £1,000, depending on the type of property you’re buying.

Personal legal fees

You will also have to pay your own legal expenses.

Interest rates

Auction bridging loans can cost between 0.50% and 0.75% per month. However, the interest rate you get will depend on the LTV and how risky the lender deems your purchase to be.

Interest on bridging loans can be repaid in one of two ways:

  • Rolled up – interest isn’t paid during the loan period, instead the interest is rolled up and added onto the amount to be repaid at the end of term.
  • Retained – interest is deducted upfront from the loan and ‘retained’ by the lender. Should you repay the loan early, any ‘unused’ interest is refunded to you.
Arrangement fee

You’ll be expected to pay an arrangement fee for the loan, roughly 2% of the loan amount.

Exit fee

Some lenders may also charge you an exit fee.

Can you bid at auction subject to securing finance?

In theory you can bid at auction without securing finance beforehand, but you almost always need to have deposit funds arranged beforehand and available on the day. In fact, most auctions require you to either show proof of deposit funds or pay a reservation fee prior to the auction.

Can you get 100% auction finance?

While you ordinary borrow 75% of a property’s value with a bridging loan, some lenders will give you the option to borrow 100% of the purchase price.

However, to access this type of finance, you will be required to put up additional security, typically in the form of other properties.

What happens if you can't finance your auction purchase?

If you win your bid but you can’t finance the property purchase, you’re in breach of contract and you stand to lose more than just the property:

lose your deposit

If you fail to secure finance once you’ve won the bid, you face losing your deposit – usually 10% of the property price, or the reservation fee.

Cover all legal costs

You may also need to stump up to cover the seller’s legal fees as well as any other losses incurred as a result of you not being able to complete the purchase.

Have legal action taken against you

When you’re in breach of contract, you could be sued for damages or compensation for losses incurred due to failure to pay.

Damages can include:

  • Loss of profit from not being able to sell the property as expected;
  • Additional fees incurred for having to resell the property;
  • Costs incurred for continuing to own the property while it resells, e.g. bills, mortgage interest, insurance etc;
  • Market depreciation of the value of the property. For example, if the value of the property decreases after the breach of contact, you could be liable to pay the difference.

Why Use Auction Finance Brokers

When you’re purchasing property at action, using an auction finance broker, like Tiger Financial, can help you secure funding fast so you complete your purchase within the time frame.

Find you the best deal on auction finance

With over two decades experience helping our clients find lenders who offer competitive rates and terms to suit them, we will find the best deal for you, saving you both time and money.

Access to a wide network of lenders

As an auction finance broker, we have access to a wide range of lenders who can provide you with the best deal for your unique situation.

We are able to get you money in as little as 24 hours and will make sure that you receive the best rate on your loan.

We also have access to lenders who don’t require a deposit or an up-front fee, who don’t mind if you have poor credit history, or even if this is your first foray into auction purchases.

Secure finance before the auction

If you’re interested in buying a property at auction, it’s worthwhile, for both your peace of mind and for moving quickly with the purchase, to get a quote from an auction finance lender beforehand.

Tiger Financial has been arranging auction finance from £100,000 to £100m+ since 2004. We have access to more loan lenders than any other bridging loan broker, allowing you to complete your property transaction as quickly as possible.

Regulatory Information

Tiger Financial Ltd is a financial services company registered in England and Wales no: 10225910.

Tiger Financial Ltd is directly authorised and regulated by the Financial Conduct Authority (FCA) no 915106.

The FCA does not regulate all mortgage, commercial mortgages or bridging loan and development products. Think carefully before securing debts or credit against your home.  Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Data Protection No ZA470485