Buying a property at auction in the UK is fast-paced and exciting — but if your financing isn’t lined up, it can also be financially risky. Once the hammer drops, you typically have just 28 days (or less) to complete the transaction. That’s why traditional mortgages are rarely suitable for auction purchases — they simply can’t move quickly enough.
This is where auction finance comes in. Designed for speed, flexibility, and short-term support, auction finance includes several specialist funding solutions tailored to the unique demands of buying at auction. In this blog post, we’ll walk you through the most common types used in the UK, how they work, and when to use them.
1. Bridging Loans
The Most Common Form of Auction Finance in the UK
Bridging loans are short-term, interest-only loans used to “bridge” the gap between buying a property and arranging longer-term finance (such as a mortgage or a sale). These loans are incredibly popular in UK property auctions due to their speed, flexibility, and accessibility.
Key Features:
Completion time: Often within 7–14 days
Loan term: Typically 3–18 months
Loan-to-Value (LTV): Up to 75% of purchase price or value
Repayment: Interest can be rolled up (paid at the end) or serviced monthly
Bridging loans are ideal if:
You’re buying a property in poor condition that isn’t mortgageable yet
You plan to refurbish and refinance or resell quickly
You need funds fast and can exit the loan within 12 months
In most cases, lenders will want to see a clear exit strategy — how you plan to repay the loan — whether it’s by refinancing, flipping the property, or selling another asset.
2. Joint Venture (JV) or Private Investor Finance
When you don’t have access to traditional lending or need extra support, JV finance can be a game-changer. This involves partnering with a private investor who funds the deal in exchange for a share of the profits or interest on their capital.
In the UK, joint venture arrangements are common among experienced investors, particularly in auction purchases where speed is critical and lender appetite may be limited.
Important things to keep in mind:
Use a legal agreement to outline roles, profit splits, and exit terms
Ensure your investor understands the risks involved
Present a strong deal and exit plan to gain trust
While not “finance” in the traditional sense, JV funding can be paired with auction finance products — with your investor providing the deposit and you securing a bridging loan for the rest.
3. Development Finance (for Heavy Refurbs or Conversions)
If your auction property requires major refurbishment, extensions, or structural changes, development finance might be more appropriate than standard bridging. This product is tailored to projects that add value through construction.
Features:
Funding released in stages (drawdowns) as work progresses
Requires detailed schedule of works and costings
Suitable for properties with planning permission, or change-of-use potential
Development finance is best used when:
You’re planning a loft conversion, extension, or full renovation
The property is uninhabitable or unmortgageable in its current state
You’ve got contractor quotes and a clear timeline
While more complex and paperwork-heavy than a standard bridge, development finance gives you the flexibility to tackle larger and more profitable projects.
4. Asset-Backed Lending
Using Property or Other Assets to Secure Finance
Asset-backed lending is another common route for UK investors, particularly those with an existing portfolio. Rather than assessing income or creditworthiness alone, the lender looks at the value of assets you already own.
Examples of Assets That Can Be Used:
Other properties (residential or commercial)
Land
Company assets
Investments
This type of finance works well for those with limited liquidity but strong equity in their current properties. You can often raise funds by placing a second charge or refinancing another property to support a cash-heavy auction purchase.
Asset-backed lending is useful when:
You're expanding your portfolio quickly
You want to avoid selling existing assets
You need leverage to outbid the competition without tying up too much cash
5. Buy-to-Let Mortgages (Post-Auction Refinance)
While not typically used to purchase auction properties directly due to the time involved, buy-to-let mortgages are a vital part of the refinance strategy that follows a bridging loan. Once the property is refurbished and mortgageable, you can refinance it onto a buy-to-let product and release equity.
This is part of a strategy often referred to in the UK as "bridge-to-let" — using bridging finance to buy, improve, and then refinance with a standard mortgage product.
It’s an ideal route if:
You’re planning to hold the property as a rental
You want to reduce your interest costs after the initial bridge
You’re building a long-term portfolio
Summary: Which Auction Finance Option is Right for You?
The best type of auction finance depends on your deal, your timeline, and your experience. For many UK investors, the journey starts with bridging finance, then moves to refinance or resale. Others leverage JV partnerships, asset-backed loans, or development finance to scale faster and fund bigger deals.
What matters most is having a clear plan before you bid — including your deposit, your funding route, and your exit. That’s where expert guidance comes in.
Ready to Fund Your Next Auction Deal?
At AUCTION 360, we help UK investors find the right funding for the right deal — fast. Whether you're buying your first auction property or scaling your portfolio, our team can match you with lenders, structure your finance, and help you avoid costly delays.
Book a free auction finance consultation today!
https://auction360.co.uk/!