Published 10 November 2012 · Last reviewed 30 May 2025
Looking to buy a Property in a Auction but want to know how much you can borrow and how you can complete in less then 30 days.
One of the most fundamental things you need to put in place before you go to a property auction is finance as most auctions will require you to complete on a purchase within 30 days.
Auction Finance Offering
- Free Quote
- No upfront broker fees
- Up to 85% Loan to Value for Light Refurbishment projects
- Broker fees of £499 inc VAT for standard cases paid on completion of the deal
- Auction, Bridging and Development Finance in one place.
- Experienced Brokers watch our Youtube channel to learn more
- A hand picked panel of reputable Auction Finance lenders
- Loans from £50,000 to £20,000,000
- Residential, Buy to Let and Commercial Finance Exit routes
- First Time Buyers Auction Finance
- First Time Landlords Auction Finance
- Light Refurbishment products offered for “flipping”
- Bridge to Let Product to give landlords certainly and comfort
- Complex Income structure
- Lending on the end value
Below I discuss the pitfalls of using conventional mortgages for auction finance and offer a more suitable alternative so you can be confident when you’re bidding for property in an auction house.
Compare the specialist auction-finance lenders side by side on our transparent bridging calculator — actual lender names, no callback wall.
Traditional Mortgage financing – Why you shouldn’t use a Mortgage to finance Auction property
If you came to me a few years ago and said I would like to buy a property and need to complete within 30 days I would have had a whole raft of conventional mortgage lenders at my deposal. The competition was fierce on service as well as price, and 30 days was an achievable and viable option, and together we would have probably gone down this route.
Furthermore products were so attractive that I would be able to find you a deal without any early repayment charges, so if you were looking to renovate and shift the property, the time frame was no barrier to penal charges.
For some of my sophisticated clients I put a ‘cheque book facility’ in place with their lender which meant that they could drawdown money against their existing property as and when required. The underwriting was pre-agreed and the transaction seamless and perfect for securing the purchase at an auction. These type mortgages are very difficult to facilitate in this hardened lending era.
If you apply the same situation to today it is not uncommon for a mortgage to take 3 to 6 weeks to arrange as the underwriting it much more onerous. So for the majority of auction purchases this would fall outside the timeframe and inappropriate due to the level of risk. The early repayment charges typically last for 2 to 3 years.
As an addition factor some of the arrangement fees imposed by the buy-to-let mortgage lenders are colossal, and in my view disproportionate to their overheads; they are simply exploiting the purchaser as the competition is small and almost operating like a cartel.
Our Finance Solution for Auction Property Purchases
All in all, those in the know, typically the developers, are steering clear of conventional mortgages in favour of more flexible finance which works like a revolving overdraft facility and is perfect if you are looking to go on a spree of: purchasing, renovating and selling property.
Finance that looks past a rigid ‘purchase price’, which conventional lenders based their sums on, to the actual ‘market value’ – which is essential as by definition a auction sale is not reflective of a property’s ‘true value’ it is akin to a ‘fire sale’. For example, you bid £80,000 and secure the property knowing it is worth £100,000 with a lick of paint – the flexible finance will lend against £100,000. Thus securing a greater percentage of borrowing which can be used to put towards the next purchase. Whereas the conventional mortgage lender would base maximum the percentage of borrowing on £80,000.
Seasoned developers appreciate the best way to realise a premium is to replace the kitchen or bathroom, and in the case of repossessions these rooms may be derelict. Conventional mortgage lenders shy completely away if either of these rooms is dysfunctional. Again, the flexible finance auction finance we can provide is not concerned.
In short, our finance will work much smarter for, providing the necessary cash-flow to make the dream becoming a property developer much more achievable.
Also check out Bridging Loan – 2020 Commonly Asked Questions https://www.nicheadvice.co.uk/bridging-loan-2020-commonly-asked-questions/