Auction finance
How to fund an auction purchase in 28 days
UK auction lots often complete in around 28 days from the fall of the gavel. Some catalogues are shorter. A standard residential mortgage is built for a different diary: valuation queues, underwriting, and an offer that arrives after the completion date has gone.
That is why investors use auction finance — usually a short-term bridge — to bid and complete, then refinance or sell when the lot is theirs.
What the 28-day clock actually means
You are typically committed once the hammer falls. A deposit (often 10% of the hammer price) is due that day or the next working day from cleared funds you control, unless a separate arrangement is already in place. That 10% is part of the purchase price. In a strong genuine below-market-value purchase the eventual bridge can sometimes reimburse or cover it at completion — you still have to pay it on the day. The balance, plus fees, is due on completion. Miss that date and you can lose the deposit and face costs. The finance has to be ready, not “in principle at some point this quarter”.
Why a high-street application is the wrong tool
High-street lenders price and process for a conventional purchase. Auction legal packs, tight exchange, and a completion date set by the catalogue do not fit that process. Bridging is the product used when the clock is short. Whether a facility can be ready in time depends on the property, title and valuation — not a slogan. Send the auction date on the enquiry form if you want a straight answer on this lot.
How much of the purchase a facility can cover
In suitable cases, lenders may advance up to 85% net on day one. Where a property is being bought genuinely below market value, the facility can sometimes cover up to 100% of the purchase price while remaining within the lender’s maximum loan-to-value against its accepted valuation. Valuation method, property, borrower, works and exit all matter. That is not standard, and it is not a 100% LTV. See how much cash you need.
What you usually need in place
- Cleared funds for the auction deposit on the day, plus fees and any gap the facility will not cover.
- A solicitor who will work to an auction timetable.
- An exit you can explain: refinance, sale, or further works then refinance.
- Indicative terms or a decision in principle before you bid — not after.
If the plan is buy, refurbish and refinance, model the works and the exit first. Use the deal calculator or read the BRR note.
Questions
Is 28 days always the completion period?
No. Many UK auctions use around 28 days, but the catalogue and special conditions set the date. Read the legal pack. Finance has to match that date, not a generic month.
Is auction finance the same as a bridging loan?
Usually yes — a short-term loan secured against the property, sized to complete, with an exit after. Some facilities are labelled auction finance; the job is the same: funds on the auction’s clock.
Can I switch to a mortgage after completion?
That is a common exit: complete on the bridge, then refinance to a buy-to-let or residential mortgage once the lender’s criteria are met. The refinance is a separate application. Do not treat it as automatic.
Can auction finance cover the whole purchase price?
Sometimes, on a genuine below-market-value lot, because lending is set against the lender’s accepted valuation rather than the hammer price. In suitable cases, auction and refurbishment facilities can also be up to 85% net on day one. Neither is guaranteed. Fees still sit on top, and the 10% deposit is still due on the day unless separately arranged.
If the auction date is close, send the lot. Indicative terms are the next step — not another article.