Funding a property at auction can cause considerable problems due to the strict payment deadlines, which can rule out most traditional forms of borrowing, such as a mortgage.
Our specialist auction bridging loan service can help borrowers arrange the necessary finance for an auction property:
At Clifton Private Finance, we help you find the best loan to finance your auction property – we help through;
We can source finance from £50,000 to £25m & provide you with a same day quotation.
Our strength as a specialist finance broker is through the relationships we have with private banks, specialist lenders, family offices and wealth managers. We also have access to private investor funds.
Each of these finance sources has their own niche, and through our market knowledge we can deliver enhanced, bespoke or exclusive terms based on your requirements.
Yes, getting a bridging loan for an auction property is possible. Bridging loans are a type of short term loan, typically used when financing a property purchase during the in-between stages of selling an existing property or arranging a standard mortgage.
Borrowers often use these loans as a means to “bridge the gap” – when funds are not to hand, but they need to move quicker than traditional borrowing would allow.
When it comes to auction property, the buyer will often need the speed and flexibility bridging loans offer to secure the property within the tight deadline.
Auction bridging loans are designed to be arranged quickly, often within a matter of days, so that the borrower can complete the purchase of the property without delay.
They are usually secured against the value of the property being purchased and can be used to cover the full purchase price alongside associated costs: legal fees, stamp duty, and auction fees, for instance.
Buying a property at auction – within the UK – requires that bidders pay at least 10% of the purchase price upfront when the auction is concluded and they have successfully bid.
Following a successful auction bid, the full payment will be due within 28 days – meaning that a bridge loan serves as a great alternative to the otherwise slow process of traditional borrowing.
Auction bridging loans essentially work like any other type of bridge loan. There is a process from application to completion, the important part being repayment, as borrowers must have a sufficient exit strategy in place in order to repay the lender.
Here are the key steps involved in the process:
Application – The borrower applies for an auction bridging loan with a lender. The lender will assess the borrower's financial circumstances and the value of the purchased property to determine whether they are eligible for the loan.
Valuation – A valuation is carried out; this will determine the maximum loan amount that the lender is willing to offer, alongside criteria set by the lender.
Offer – If the borrower is approved for the loan, the lender will make an offer which will outline the loan amount, interest rate, fees, and repayment terms. If the borrower accepts the offer, they will need to provide any necessary documentation and agree to the terms and conditions of the loan.
Completion – Once the loan has been approved, the borrower can use the funds to purchase the property at auction. Typically, funds can be delivered very quickly – within a week, depending on the complexity of the case.
Repayment – As stated, a lender will need to have some assurances before a borrower successfully applies. However, when it comes to repayment, the terms typically span 3 months or more – and due to the short-term nature, interest rates can be more expensive. Borrowers will repay the loan when the term ends through the sale of the property, refinancing through a mortgage, or using funds sourced elsewhere.
Watch our video below about how we helped a client secure a property they'd bought at auction with a bridging loan:
For the purchase of a property at auction, you’ll have to put down 10% of the price as a deposit – or, alternatively, an asset as security that has equal value.
When it comes to an auction bridge loan, you can offer a lender a certain amount as a deposit – typically a lower amount than a traditional mortgage – yet, the exact amount required to secure a certain LTV (Loan-to-Value) will vary based on the lender.
The amount put down as a deposit for the loan will be deducted, and the borrower will then repay the loan at the end of the term, alongside interest payments and any other applicable fees.
The overall cost of an auction bridging loan is subject to numerous factors, including the upfront deposit:
Loan amount – The loan amount will affect the repayment terms, with larger loans requiring higher monthly repayments.
Interest rate – Interest rates for bridging loans generally are higher than traditional mortgages due to the short-term nature of these loans. They present a higher risk, and when it comes to lenders (depending on the loan size) interest rates may be even higher to reflect the potential risk.
Additional fees – including arrangement fees, valuation fees, legal fees etc. These fees can vary depending on the lender and the specific terms of the loan.
So it is essential that borrowers consider costs, and whether short-term finance is the ideal solution – and whether they can sufficiently repay within the deadline.
An expert bridge loan broker can guide you through all your options and determine the best loan path forward.
For an initial idea of cost and repayment, you can use our auction finance calculator below.
Try our bridging loan calculator to get a free indicative quote for how much you can borrow and how much it could cost.
Despite higher interest rates than traditional mortgages, there are useful benefits when it comes to repayment - some of which are better suited to a borrower’s circumstances:
Monthly interest payments – this is the standard way to repay interest on a loan, with set monthly payments due throughout the term.
Rolled-up interest – With rolled-up interest, the borrower does not need to make monthly interest payments but will repay the full loan amount plus accrued interest at the end of the loan term.
Retained interest – Retained interest is similar to rolled-up interest, but instead of adding the interest to the loan amount, it is deducted from the loan amount at the outset instead.
We secured £247K in bridging finance for this couple to buy a Grade II-listed farmhouse in Kent at auction – which they planned to subdivide into a holiday home and a home for themselves. Finance was secured in time to complete post-auction payment, with the eventual sale of their current home as the agreed exit. Read more »
Auction bridging loans are used to finance several property types, or assets, including:
Additionally, alternative assets can be considered when it comes to an auction bridging loan such as fine art or classic cars.
With auction finance, you can get an LTV of up to 80% - though it can be higher with additional securities alongside the primary property the loan will be secured against.
It is, however, unlikely that you will be able to get 100% LTV financing for an auction property, due to the requirement of a deposit, and a certain amount of the loan needed to be paid upfront.
If you are looking to purchase a property at auction and need finance we can help.
We can source finance from £50,000 to £25m & provide you with a same day quotation.
Our strength as a specialist finance broker is our relationships with private banks, specialist lenders, family offices and wealth managers. We also have access to private investor funds.
Each of these finance sources has its own niche, and through our market knowledge, we can deliver enhanced, bespoke or exclusive terms based on your requirements.
We pride ourselves on delivering a cost-effective, individual and highly professional mortgage broker service. Call us now to arrange a first discussion of your situation:
I approached Clifton Private Finance to help me get a mortgage as an Expat working in the Far East. I would normally 'cut out the middle man' on something like this and try to get myself a deal directly with the banks, but I am now sold on the broker concept and wouldn't hesitate to use Clifton Private Finance again. There were a number of complicating factors such as being an expat, the stamp duty holiday, the sheer amount I wanted to borrow and the fact I wanted it all wrapped up before the Stamp Duty holiday ended. It is clear to me now that the relationship that brokers have managed to foster with their banks means they can simply pull levers and make stuff happen that us ordinary folk cannot. Put simply, they are worth every penny, will take most of the stress out of the lending process, and seem to have access to deals that you just won't find on the internet. Thank you George and Jan for all your hard work!
James M
Luther was excellent. Very clear in his advice and explanations of products and was able to move things on very quickly when we ran into difficulties with the estate agents. Without a doubt I would recommend Luther to all friends, family and colleagues. Luther was a joy to deal with and took a lot of the stress out of a troublesome transaction, from my end. I would view Luther as real asset to Clifton Private Finance Ltd.
William W
The team at Clifton Private Finance has been outstanding, not only in helping me to obtain a mortgage on a slightly unusual home, but also in continuing to provide support and liaise with the lender and solicitors through to completion. Thank you for making the process of buying my first home much easier.
Chantelle S
Sam O'Neill, and the new lender he identified for me, worked tirelessly together using my time constraints, to make sure my mortgage application was completed on time. They are a brilliant company to work with, fast, efficient, open and transparent from the very beginning, and turned a seemingly impossible situation into a viable one. Sam was brilliant throughout the whole process and I would highly recommend him, and his colleague Helen, to anyone without hesitation, I cannot speak highly enough about them.
Myr B
I was incredibly lucky to find Clifton Private Finance after a search on line as their service has been more than exemplary. My point of contact was Sam 0’Neill and he was happy to help at every stage during the application of the bridging loan, making a stressful process much easier to deal with. He was always available by phone or email and gave prompt answers to queries I had as well as always getting back to me when he said he would. That to me is excellent customer service and I cannot thank him personally or the company enough for the support they have given me.
C Jefferey
Adam cannot thank you enough for all your support throughout this arrangement. You have gone more than the extra mile to support us. Without you we would not have got our dream retirement home. You have been most professional and personable. Liz and I would be more than happy if you wanted to use us a reference with respect to any future clients.
Nigel & Liz K - Bristol
You have certainly shown me that you do everything for your clients, including tolerating their excessive emails and questions for updates. I have been kept in the loop, from yourself, about why the delays were occurring (Nationwide, post etc) which I would like to highlight that I really appreciated. I certainly will be able to recommend you to others as and when the need arises.
Mr Morris
I recently contacted Clifton Private Finance after a Google search for bridging finance providers and was immediately struck by their efficiency and support. Forms were emailed over almost immediately and the necessary finance was arranged within a few days. None of the other companies I contacted came close to their professionalism, and the quote that I eventually received was impressive. Thank you Adam, your help has enabled us to reserve the house that we wanted and I certainly recommend you to others.
Mr M. R. - Oxford
Absolutely brilliant. The service was first class, got everything sorted efficiently and were always friendly. Any fees were negligible compared to the service offered. Robert was particularly outstanding.
Charles N
My advisor, Robert, was very helpful in finding the mortgage to suit me. He kept me up to date throughout the process and dealt with any issues when they arose.
Rowena C
