Auction Finance

Fast Bridging Loans for Property Auctions

Buy Property at Auction with Confidence

Property auctions offer some of the best opportunities to buy below market value – but the strict 28-day completion deadline often leaves buyers scrambling for funds. Miss the deadline, and you could lose your 10% deposit, face legal action, and forfeit the property.

That’s why smart investors use auction finance. At Aura Capital, we arrange fast bridging loans tailored for auction purchases, helping you complete on time, every time.

Auction finance is a short-term bridging loan designed to help buyers complete property purchases at auction within the strict timescales required. Unlike mortgages – which can take months to arrange – auction bridging loans can be approved in as little as 24 hours, with funds released in days.

Key features of auction finance include:

  • Funding available for residential, commercial, or mixed-use properties

  • Fast approvals – decisions often within 24 hours

  • Short loan terms – typically 3–24 months

  • Flexible exit strategies – refinance to a buy-to-let or sell the property

What is Auction Finance?

Why Auction Finance is Essential

When you win a property at auction, you usually pay 10% of the price upfront on the day, with the balance due within 28 days. If you fail to complete, you risk losing your deposit and facing penalties.

Mortgage lenders often can’t work this quickly – but auction bridging loans are built for speed.

Auction finance solves three key problems:

  1. Speed – lets you complete inside 28 days.

  2. Certainty – bid with confidence knowing funds are lined up.

  3. Flexibility – buy unmortgageable properties or those needing work.

How Auction Finance Works – Step by Step

1. Pre-Approval Before Auction

  • Secure a Decision in Principle (DIP).

  • Review auction catalogues.

  • Check legal packs and conditions of sale.

  • Line up solicitors familiar with auction timelines.

2. Win the Bid

  • Place bids confidently, knowing your finance is ready.

  • If successful, pay the 10% deposit and exchange contracts immediately.

3. Completion Deadline

  • You’ll usually have 28 days (sometimes less) to complete the purchase. However, this may vary for different auction houses e.g. Savills, Allsop

  • Balance due within 28 days (sometimes 14).

  • Auction finance provides the funds needed to complete

4. Funds Released

  • Auction finance provides the remaining funds in time for completion.

5. Exit Strategy - Once purchased, you can:

  • Refinance to a buy-to-let or commercial mortgage

  • Sell the property for profit

  • Refinance with development or refurbishment finance

Properties Eligible for Auction Finance

  1. Residential homes & flats – vacant or tenanted

  2. Commercial buildings – shops, offices, warehouses

  3. Mixed-use – flats above shops, pubs with accommodation

  4. Land – with or without planning

  5. Unmortgageable properties – without kitchens, bathrooms, or requiring upgrades

Who Uses Auction Bridging Loans?

  1. Property Investors – secure below-market properties and flip them quickly

  2. Landlords – expand portfolios with buy-to-let opportunities

  3. Developers – buy properties needing refurbishment or conversion

  4. First-Time Auction Buyers – secure funding even if mortgages aren’t suitable

Benefits of Auction Finance with Aura Capital

  1. Speed – approvals within 24 hours, funds in days

  2. Completion in 28 days – perfectly aligned to auction deadlines

  3. High LTV – up to 80% net LTV, with options for additional security and higher LTV available

  4. No early repayment charges – repay once your exit is ready

  5. Flexible solutions – works for residential, commercial, land, and mixed-use

Auction Finance vs Mortgage – What’s the Difference?

Features: Auction Finance vs Mortgage

Speed

  • Auction finance: 1–14 days

  • Mortgage: 6–12 weeks

Property type

  • Auction finance: Any, including unmortgageable

  • Mortgage: Limited, must be habitable

Term

  • Auction finance: 3–24 months

  • Mortgage: 20–30 years

Flexibility

  • Auction finance: High – works for refurbishments, conversions

  • Mortgage: Low – strict lending rules

Exit required

  • Auction finance: Yes – refinance or sell

  • Mortgage: No – long-term loan

Extended Guide: How to Buy at Auction with Finance

Step 1 – Research the Auction Catalogue

  • Shortlist properties that fit your strategy.

  • Compare guide prices to recent local sales.

Step 2 – Check the Legal Pack

  • Lease length, restrictive covenants, planning restrictions.

  • Identify risks before bidding.

Step 3 – Arrange Finance in Advance

  • Secure a DIP with a lender or broker.

  • Clarify loan size, LTV, and rates.

Step 4 – Set Your Maximum Bid

  • Factor in purchase price + SDLT + auction fees + finance costs.

Step 5 – Auction Day

  • Bring ID, proof of address, and deposit funds.

  • Stick to your maximum bid to protect profit margins.

Step 6 – Post-Auction

  • Pay 10% deposit immediately.

  • Send signed contract and details to your solicitor.

  • Complete with auction finance within 28 days.

Investor Strategies with Auction Finance

Flipping for Profit

  • Buy undervalued properties, carry out refurbishments, and sell at a higher price.

Buy-to-Let Expansion

  • Purchase at auction, upgrade, and refinance into a BTL mortgage for rental income.

Commercial Conversions

  • Turn offices or shops into residential units using short-term auction finance.

Land Purchases

  • Acquire land with or without planning permission, then refinance with development finance.

Common Mistakes at Auction (and How Finance Helps)

  1. Not checking the legal pack – always review title restrictions, planning issues, and tenancy agreements.

  2. Bidding without finance arranged – risk of losing deposit if funding falls through.

  3. Underestimating refurbishment costs – some auction properties require significant investment.

  4. Failing to plan exit strategy – lenders require a clear repayment plan.

    Auction finance helps avoid these mistakes by giving you speed, certainty, and tailored funding.

Case Studies – Real Auction Finance in Action

Residential Investor in Leeds

  • Purchase Price: £150,000

  • Loan: £112,500 (75% LTV)

  • Works: £20,000 cosmetic upgrades

  • Exit: Sold at £210,000 within 6 months

  • Outcome: £50,000 profit before costs

Commercial Buyer in Manchester

  • Purchase Price: £500,000

  • Loan: £350,000

  • Exit: Refinance into commercial mortgage after securing tenant

  • Completion: 19 days

First-Time Buyer in Birmingham

  • Purchase Price: £95,000

  • Loan: £70,000

  • Exit: Refinanced to BTL mortgage at £130,000 valuation

  • Outcome: Long-term rental income secured

Overseas Investor in London

  • Purchase Price: £800,000

  • Loan: £560,000 bridging loan

  • Exit: Refinanced into buy-to-let with international lender

  • Completion: 14 days

Auction Finance Checklist

  • Get a Decision in Principle before bidding

  • Set a maximum bid based on finance + costs

  • Review legal packs in detail

  • Line up a solicitor familiar with auctions

  • Plan your exit (refinance or sale)

  • Allow for contingency in refurb budgets

Typical Costs of Auction Finance

  1. Interest rates: from 0.6%–1.2% per month (depends on LTV, property type, borrower profile)

  2. Arrangement fees: typically 1–2% of loan amount

  3. Valuation & legal fees: payable upfront

  4. Exit fees: not always applicable

    While rates are higher than standard mortgages, remember—auction finance is short-term, designed to secure deals quickly.

Investor Tips for Auction Success

  1. Always view the property before bidding

  2. Check the legal pack for restrictions, leases, and covenants

  3. Set a maximum bid and stick to it

  4. Secure finance in advance to avoid delays

  5. Plan your exit strategy before you even bid

Why Choose Aura Capital?

  1. Wide panel of UK lenders for the best rates

  2. Specialists in auction bridging and property finance

  3. Fast turnaround—funding often ready within a week

  4. Support at every stage: legal packs, valuations, exit planning

  5. Transparent fees—no hidden surprises

Frequently asked questions

  • Approvals in 24 hours, funds in 3–10 working days.

  • Not necessarily. Adverse credit can be considered.

  • Usually up to 80% LTV, but higher possible with additional security.

  • Yes, some lenders accept foreign nationals.

  • Typically £50,000, though some lenders offer smaller loans.

  • Most loans are 12 months, extendable to 24. However, 6 and 9 months options are also available

  • Yes – refinance, sale, or development.

  • No – most lenders allow repayment after 3 months without ERCs.

  • Arrangement fee, valuation, legal fees, and possibly exit fee.

  • Yes, with or without planning.

  • Exit plan is more important than income – refinancing or sale.

  • Yes – specialist lenders are flexible.

  • You risk losing deposit and may face legal action, which is why pre-arranged finance is vital.

Glossary of Key Terms

  1. LTV (Loan to Value): % of property value a lender will fund.

  2. DIP (Decision in Principle): lender’s initial confirmation of borrowing ability.

  3. Exit Strategy: how the loan will be repaid.

  4. GDV (Gross Development Value): estimated value after works.

  5. ERC (Early Repayment Charge): fee for settling loan early (often not charged).

Market Trends in Property Auctions

  1. Rising popularity – more investors shifting from private sales to auctions.

  2. Growth of online auctions – platforms like Savills, Allsop, and Auction House expanding.

  3. Increased stock – repossessions and probate sales adding supply.

  4. Demand from landlords – seeking below-market opportunities amid tighter margins.

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