Auction finance for property purchases in the UK
If you’re looking to purchase a property at auction in the UK, it’s crucial to have funds in place swiftly. Auction finance—sometimes called auction bridging finance—can provide the fast, short-term funding you need to secure a property the moment the gavel falls.
Last updated: November 2025, edited by Joe Morley, reviewed by Vivek Seda
Fast access to funds when buying at auction
What is auction finance?
Auction finance is a type of short-term funding used to purchase properties at auction. Unlike a traditional mortgage, auction finance is designed to release funds quickly — often within 14 to 28 days — so buyers can meet tight auction deadlines.
This funding is typically secured against the auction property itself and can be structured as bridging finance or a specialist auction loan. It’s a popular option for property developers, investors, and small businesses buying commercial or residential property at auction.
Why auction properties need fast financing
Auction properties often come with a strict 28-day completion deadline once the hammer falls. That’s not enough time to arrange a standard mortgage, which can take 6 to 8 weeks or longer. That’s why specialist auction finance or bridging loans for auction properties are essential — they ensure buyers don’t lose their deposit or the property.
How does auction finance work?
Pre-approval: Secure an agreement in principle (AIP) before auction day.
Bid with confidence: Know your budget and terms in advance.
Win the property: After a successful bid, you usually pay a 10% deposit.
Loan finalisation: Submit documents to the lender immediately after the auction.
Completion: Funds are typically released within 14–28 days to meet auction terms.
You’ll repay the loan either through refinancing with a long-term commercial mortgage, or from the proceeds of a property sale.
Types of auction finance
Bridging loan
A bridging loan bridges the gap between funding needs. Let’s say you want to buy a company premises today, but won’t sell your current company property for another 6 months, as you’d like some time between the move to ensure your team properly settle into their new offices.
Buy-to-let mortgage
Designed for rental properties—commercial or residential. The lender focuses on projected rental income to gauge affordability. While potentially lucrative, a buy to let commercial mortgage comes with the risk of market fluctuations in rent demand.
Property development or commercial refurbishment
Benefits of using auction finance
Fast access to capital in days, not weeks
Flexibility to buy non-standard or unmortgageable properties
Available for commercial, residential or mixed-use properties
Works for individuals, limited companies, or SPVs
Costs of auction finance
Auction finance generally has higher interest rates than traditional mortgages due to the short-term risk.
Here’s what to expect:
Monthly interest: Typically 0.6% to 1.5% per month (not APR)
Arrangement fees: Usually 1% to 2% of the loan value
Exit fees: May apply when repaying or refinancing
Valuation & legal fees: Paid upfront or deducted from the loan
Auction finance calculator: Speak to our experts for tailored costs
For example: Borrowing £200,000 for 6 months at 1% monthly interest would cost £12,000 in interest, plus arrangement fees.
Can you get a mortgage for auction properties?
Standard mortgages are difficult to use for auction purchases
Most mortgage lenders for auction properties will not fund properties that are:
Uninhabitable or without a working kitchen/bathroom
Requiring major structural work
Lacking appropriate legal documentation
In these cases, auction bridging finance can be a viable alternative — and it can often be refinanced later via a mortgage once the property meets lender requirements.
What can auction finance be used for?
Purchasing residential or commercial property at auction
Buying properties requiring refurbishment
Securing below-market opportunities
Expanding property portfolios
Avoiding chain breaks and delays
Purchasing land or mixed-use lots
Acquiring unmortgageable properties for cash buyers
Is auction finance right for you?
You might consider auction finance if:
You’re bidding at auction and need guaranteed funds within 28 days
You’re a property investor or developer
You want to refinance after improving or letting the property
You can confidently repay via sale, refinancing, or own funds
It’s essential to have an exit strategy — such as refinancing into a long-term business loan or mortgage — before taking out auction finance.
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Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Financial product information
Representative example*
• 9.7% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,291.56. The total amount payable is £54,997.44
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 8.2% APR
Repayment period
1 month to 30 years terms
Want to know more about auction finance?
Can I apply for auction finance with bad credit?
Yes. Because auction finance is secured against property, it’s often available to borrowers with imperfect credit. Lenders may focus more on the asset value and your exit plan.
Can I use auction finance to refurbish a property?
Absolutely. Bridging loans and auction finance can include funds for refurbishment, especially if your exit strategy involves refinancing or selling.
Do I need a deposit for auction finance?
Yes. Most lenders require a deposit — usually 25% of the purchase price, though some may offer higher loan-to-value options if your case is strong.
How long does auction finance take to arrange?
Pre-approval can be done in advance, and funds can often be released within 5–14 working days after a successful auction bid.
Is auction finance regulated?
If the property is for residential use and the borrower is an individual, it may be regulated by the FCA. Commercial auction loans are typically unregulated.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
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Vivek Seda
Business Finance Manager
Vivek is the Asset Based Lending Manager at Funding Options by Tide. Vivek has been in the industry for over 10 years, working for both lenders and brokers. His product specialisms cover Asset Finance, Invoice Finance, Property Finance and structured transactions.