AUCTION FINANCE
Auction Finance – Expert Rapid Mortgages for Property Auction Purchases
Found your next investment property at auction? You’ve got 28 days to complete the purchase.
Standard mortgages won’t move fast enough. That’s where auction finance comes in.
Property auction purchases require rapid finance arranged within days, not weeks. As a
specialist auction finance broker, we arrange rapid mortgages and bridging finance specifically for auction property purchases. We understand auction timescales, know the lenders who can move quickly, and can get you to completion on time.
The Auction Process and Timeline
Property auctions are fast-paced events where properties sell to the highest bidder.
Understanding the timeline is crucial because it determines how quickly you need finance.
The 28-Day Completion Deadline
This is critical: you have 28 days from the auction date to complete the purchase and pay in full.
In standard property transactions, you might have 8-12 weeks between offer and completion.
Auction purchases compress this to 28 days. This timeline rules out traditional mortgages.
Most high street lenders take 4-8 weeks just for underwriting. You’d miss the 28-day deadline
before their mortgage offer even arrives. That’s why auction finance is essential for auction
purchases.
What is Auction Finance?
Auction finance isn’t a standard mortgage product. It’s rapid finance specifically structured for auction purchase timescales. Typically 5-7 days from instruction to funds available, structured specifically for the auction completion deadline.
Key characteristics of auction finance:
- 28-day completion – Structured specifically for the auction deadline
- Rapid arrangement – Typically 5-7 days from instruction to funds
- Asset-based lending – Assessed on property value, not personal income
- Flexible criteria – Unusual properties, first-time buyers, credit issues less restrictive
- More expensive – Higher interest rates reflect speed and risk
Common Auction Finance Scenarios
Buy Below Market Value, Refinance After
You find a property at auction below market value. You bid and win. Using auction finance, you
complete the purchase within 28 days. Once you own it, you refinance into a standard mortgage
or sell it for profit. This is the classic auction investment strategy.
Development Purchase
You’re a property developer. You spot a development opportunity at auction priced below
market value. Auction finance funds the purchase. Once you have planning or complete
development, you refinance or sell.
Buy-to-Let Investment
You’re a property investor. You find a rental property at auction priced well below market. You
use auction finance to complete, then refinance into a buy-to-let mortgage once you own it. The
rental income helps support the application.
Portfolio Additions
You’re an experienced property investor with an established portfolio. You spot additional
auction properties that fit your strategy. Auction finance lets you move quickly to add to your
portfolio without losing deals to other bidders.
The Auction Finance Process
Understanding the process helps you prepare and meet deadlines. Here’s the timeline from winning the auction to completion.
Days 1-2: Initial Application
You’ve won the property. Contact your auction finance broker immediately. Provide property
details (address, purchase price, property type, condition). The broker approaches lenders.
Days 2-3: Lender Offers
Lenders provide indicative offers. You review terms and choose your preferred lender. Some
lenders can provide offers on the same day if you move fast.
Days 3-5: Formal Application and Valuation
You submit a formal application. The lender arranges a property valuation. Valuations need to
turn around quickly for auction finance – experienced lenders have arrangements with valuers
who prioritise auction properties.
Days 5-7: Valuation Return and Offer
The valuation comes back. Assuming the property value supports the finance, the lender issues
a formal offer. If the valuation comes in low, you might need additional funds or the lender might
reduce the offer.
Days 7-14: Legal Work
Your solicitor completes the auction finance legal work. This is faster than standard mortgage
legal because auction finance documents are simpler. You review and approve the document.
Days 14-28: Completion
The funds are released to your solicitor. Your solicitor completes the purchase. You now own
the property. The clock has stopped – you’ve completed within the 28-day deadline.
Auction Finance Costs
Auction finance is expensive. Understanding the costs helps you assess whether it makes sense for your investment.
Interest Rates
Auction finance interest rates typically range from 0.5-1.5% per month (6-18% annualised),
depending on the lender and deal certainty. Higher uncertainty equals higher rates.
Arrangement Fee
Most lenders charge arrangement fees of 1-2% of the loan amount. On a £250,000 loan, that’s
£2,500-£5,000.
Valuation Fee
Lenders charge for urgent property valuations, typically £250-£500.
Legal Fees
Your solicitor charges for auction finance legal work, typically £600-£1,200.
Total Cost Example
A £250,000 auction finance loan at 1% per month for 3 months costs: £7,500 (interest) + £3,750
(arrangement fee at 1.5%) + £350 (valuation) + £800 (legal) = approximately £12,400 total. As a
percentage of your loan, that’s about 5%. If you’re buying a property 20% below market value,
that cost is easily recovered.
Frequently Asked Questions
How quickly can I get auction finance?
From instruction to funds available, typically 5-7 days if you move fast. With perfect
circumstances, some lenders can fund in 3-4 days.
What's the maximum I can borrow?
Up to 75-80% of the property’s value, depending on the lender. A property worth £300,000
would support borrowing of £225,000-£240,000.
Do I need a deposit?
If you’re borrowing at 75% LTV, you need 25% from elsewhere. This might come from
savings, release of equity from other properties, or a second charge mortgage.
What if the property doesn't value as high as the auction price?
If the valuation comes in below your purchase price, you have a problem. The lender won’t
lend above their valuation. Example: You win at £300,000. The valuation is £280,000. The
lender offers 75% of £280,000 = £210,000. You’re short £90,000. Know your market values
before bidding.
Can I get auction finance if the property needs significant work?
Yes. Lenders understand auction properties often need work. They’ll value the property as-is
and lend against that value. The fact that it needs renovation doesn’t disqualify it.
Do I need to prove income for auction finance?
Not to the same extent as mortgages. Auction finance is asset-based. The property value
matters more than your income. But lenders will want to see that you can manage payments.
Can I get auction finance if I've had credit problems?
Yes. Auction finance is less credit-restrictive than mortgages. A credit problem won’t
disqualify you if the property has adequate value.
What's my exit strategy?
Before you bid, know how you’ll exit the auction finance. Options: Refinance into a standard
mortgage, refinance into a buy-to-let mortgage, sell the property, or refinance into longer-term
bridging. Don’t bid without a realistic exit plan.
Why Choose a Specialist Auction Finance Broker
General mortgage brokers often don’t understand auctions or handle them regularly. Specialist
auction finance brokers add real value:
- Lender relationships – We know which lenders specialise in auction finance
- Auction experience – We've arranged dozens of auction deals and know the pitfalls
- Valuation management – We chase valuers and keep them prioritising auction properties
- Timeline management – We track the 28-day deadline and chase all parties
- Problem-solving – When things go wrong, we solve them fast
Ready to Move on Your Next Auction?
Whether you’re an experienced auction buyer adding to your portfolio or a first-time auction
investor, we can arrange rapid finance to meet your completion deadline.Get in touch immediately after winning at auction:
