Cash on the day
How much cash do you need to buy at auction?
The figure people remember is the 10% deposit. That cheque is due on auction day. It is part of the purchase price, not a fee on top — and it is not always cash you leave in forever. The rest of the cash question is how the facility is sized, plus tax and fees.
The 10% is paid on the day
Most UK auctions take a deposit of 10% of the hammer price when you win the lot — sometimes more if the special conditions say so. You need cleared funds for that payment unless a separate arrangement is already in place. Miss it and you can lose the lot. That money is at risk if you cannot complete.
Because the deposit is part of the purchase price, the eventual bridge can sometimes reimburse or cover that portion at completion — typically on a strong, genuine below-market-value purchase, and only if the advance still sits inside the lender’s maximum loan-to-value against its accepted valuation. Do not treat the 10% as permanently outside the facility. Do not assume the lender will send it to the auction house on the day.
How the facility is sized
Lending is constrained against the lender’s acceptable open-market value, not automatically against the hammer price. 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 a standard offer and it is not a guarantee. It is not a 100% loan-to-value. A thinner discount, a different valuation method, or a weaker exit means more of your own money in. If you are funding works from cash rather than a drawdown, add the refurb, contingency and professional fees as well. Model BRR before you bid if that is the plan.
Fees that sit on top
- SDLT (England and Northern Ireland) — additional dwellings usually attract a surcharge on top of the standard bands. Check the current bands; do not guess from an old deal.
- Legal fees for an auction timetable.
- Valuation and broker fees.
- Arrangement fee on the bridge, often a percentage of the facility, paid in cash at completion unless it is deducted from the loan.
- Interest: rolled up to redemption, or serviced monthly from cash if you choose that.
The deal calculator puts purchase, LTV, SDLT (additional, standard or manual), fees, works and the refinance exit on one page. That is the honest way to see cash invested and cash released — not a back-of-the-catalogue 10%.
Questions
Is the auction deposit always 10%?
Often, but not always. The catalogue and special conditions set the percentage and when it is due. Budget for at least 10% unless you have read otherwise.
Can the bridge cover the 10% deposit?
The 10% is still paid on auction day from cleared funds you control, unless a separate arrangement is already in place. It is part of the purchase price. In a strong genuine below-market-value purchase, the eventual bridge can sometimes reimburse or cover that portion at completion, while remaining within the lender’s maximum loan-to-value against its accepted valuation. Do not assume the lender will pay the auction house on the day, and do not treat the deposit as always left outside the facility.
Can a facility cover the whole purchase price?
Sometimes, on a genuine below-market-value lot — because the advance is still inside the lender’s maximum loan-to-value against its accepted valuation, not because anyone is offering a 100% LTV. In suitable cases, auction and refurbishment facilities can also be up to 85% net on day one. None of that is standard. Fees and tax still sit on top. Send the deal if you want a view on this lot.
Do I need extra cash if interest is rolled up?
Rolled-up interest is added to the redemption, so it does not leave your current account each month. It still increases what must be repaid — and therefore how much the refinance must raise. Serviced interest does the opposite: you pay monthly from cash and the redemption stays closer to the gross loan.
Put the lot price, a working LTV and the fees in the calculator. Then enquire if an 85% net day-one advance or a BMV purchase cover is realistic for this lot.