How do you finance an auction purchase in 28 days?

How does auction finance work?

Auction finance is a bridging loan used to complete an auction purchase on time. You get a lender's agreement in principle before the auction, win the lot, then the lender values the property and completes inside the deadline. Later you repay the bridge by refinancing onto a buy-to-let or commercial mortgage, or by selling.

Traditional auction

The hammer falls and you've exchanged contracts: there's no cooling-off period. You pay a 10% deposit on the day and usually have 28 days to complete. Check the auction's own terms, because some lots set a different completion date.

Modern Method of Auction

Often run online. You usually pay a reservation fee when you win, then have 28 days to exchange and a further 28 to complete, about 56 days in total. The reservation fee is non-refundable and isn't part of the purchase price, so lenders won't fund it. The longer timescale sometimes makes a mortgage possible, but bridging is still common because 56 days is tight for many mortgage lenders.

What does the 28-day timeline look like?

This is an illustration of a well-prepared purchase, not a promise. Every case moves at its own pace, and the lender's valuation and your solicitor's work set the speed.

A standard valuation typically takes 2–5 days once booked, and some lenders accept an automated valuation on simple cases. Some bridging lenders can complete in as little as 2–5 days when everything is ready, but leave margin: searches, title questions and the legal pack all take time, and no lender can promise your date.

What should you sort before auction day?

The most common mistake is turning up unprepared. Do as much due diligence as you can beforehand, so you know the property is lendable, and go through the legal pack in detail with your solicitor.

Legal pack red flags

Documents to have ready

• Proof of the deposit and buyer's fees in your own funds
• ID for you, or company details and directors' ID if you buy through a company
• Your property experience and any existing portfolio
• The lot details, legal pack and your maximum bid
• Your exit plan: re-mortgage or sale and timelines

How much can you borrow?

Bridging funders lend a percentage of their valuation, up to 80% LTV on the right case, with many auction loans lower. Some lenders lend against the lower of the price and the valuation. If you need more, adding a second property as security can increase what you can borrow.

Worked example (illustration only): you win a flat at £250,000. The lender values it at £250,000 and lends 75%, so £187,500. You pay the £25,000 deposit on the day and another £37,500 at completion, plus buyer's fees, legal costs and any arrangement fee deducted from the advance. If the valuation comes in at £230,000, the same 75% is £172,500, and you need £15,000 more of your own money. Plan for a down-valuation before you bid.

What does auction finance cost?

Bridging costs come from monthly interest plus fees, and auction buying adds its own on top.

• Interest: paid monthly, rolled up, or retained from the advance. See bridging loan costs.
• Lender fees: arrangement fee, valuation, legal costs, sometimes an exit fee.
• Auction fees: buyer's premium or administration fee, sometimes a legal pack fee, paid on the day.
• Special conditions: costs the seller passes to the buyer.
• Modern Method of Auction: the reservation fee.

We don't quote rates on this page. They depend on the property, the LTV and the lender.

What's your exit?

Lenders care about how you'll repay as much as what you're buying.

• Refinance: onto a buy-to-let or commercial mortgage once the property is mortgageable. Some mortgage lenders want you to have owned it for a set period first.
• Sale: after works, or straight away if you bought below market value.
• Refurbish, then refinance: common with run-down properties. See light vs heavy refurbishment bridging.

More on this in how to refinance out of a bridging loan.

Can you finance unmortgageable or commercial lots?

Often, yes. Bridging lenders look at property a mortgage lender won't, such as houses with no kitchen, or derelict buildings, provided the exit is clear. Commercial and mixed-use properties are finance-able too, though the lender will look harder at the use, any tenants and the exit.

What if you plan to live in the property?

Then the loan is likely to be regulated. Capito arranges unregulated bridging only, so we pass those enquiries to an FCA-authorised firm.

Buying from receivers or an administrator? The deadline works the same way with a few extra traps. See buying from receivers.