Auction finance and bridging loans

Last reviewed: 4 October 2026

BridgingLoans.online is an independent UK introducer operated by PASECOM GROUP LTD (company 17139327, ICO ZC117546). We do not lend and we do not advise. Nothing on this page is a quote, an MCOB illustration or an offer of credit.

Why do auction buyers use bridging?

When the hammer falls at a traditional auction you have usually exchanged contracts. A deposit is due on the day and the balance must complete by the deadline in the contract, often 28 days. Missing it can mean losing the deposit and facing further claims from the seller. A standard mortgage is rarely built for that timetable, and many auction lots are not in a condition a high-street lender will accept — no kitchen, structural problems, short leases or unusual titles. A bridge can complete the purchase; a refinance or sale then repays it.

Online and “modern method” auctions can have different deposits, fees and timescales. Read the specific terms in the legal pack rather than assuming 28 days.

What should I do before bidding?

1. Read the legal pack with a solicitor. Title, leases, searches, special conditions and any extra buyer’s fees all affect the lender and your budget.
2. Get a decision in principle. Set out the lot, your maximum bid, the cash you will add and your exit. A decision in principle is not an offer, but it shows whether the case is likely to work.
3. Set the maximum bid from the numbers. Work back from the gross loan a lender may offer, the fee and interest, stamp duty, legal and auction fees, and the works budget.
4. Line up a valuer and solicitors. Ask whether the lender can instruct the valuation quickly and whether your solicitor handles bridging regularly.
5. Write down the exit. Refurbish and refinance, refurbish and sell, or sell another asset — with a timescale.

How much can I borrow on an auction purchase?

Residential lots are commonly underwritten with a gross LTV cap around 75%; commercial lots and land are usually lower. The lender works from its valuer’s figure, not your winning bid. If you buy below market value the valuation may help; if you overpay, you cover the difference. Because the cap applies to the gross loan, the cash available is below the headline percentage once the fee and retained interest are included.

Worked example: a £240,000 lot

Suppose the valuer agrees £240,000, you need £168,000 from the lender to complete, and you plan a six-month term before refinancing, using this site’s teaching defaults.

Indicative educational example using this site’s calculator method: fee = net × 2%; interest = (net + fee) × 0.85% × months; gross = net + fee + interest. The 0.85% a month and 2% fee are teaching defaults, not our rates and not a quote. Valuation, legal and broker costs are not included.

You would need £72,000 of your own money towards the price (including the deposit paid on the day), plus stamp duty, fees and works. The lender secures £180,099.36, a gross LTV of 75.0% — right at a typical 75% gross cap, so even a small down-valuation would mean finding more cash on a tight deadline. If the refinance is at 75% of a post-works value, that value needs to be comfortably above £240,132.48 for the new loan to clear the bridge before costs. Model your own lot in the calculator.

What can go wrong?

• Down-valuation. The lender lends on its valuer’s figure. You must cover any shortfall, quickly.
• Title or lease problems found after the auction can delay or stop the loan.
• Late start. Arranging finance after winning leaves fewer lenders able to meet the deadline.
• Weak exit. A refinance that depends on works you have not costed, or rent that will not pass a stress test.

Credit history matters less than equity and the exit on many auction cases, but it still affects price and whether a refinance exit is realistic — see bridging loans with bad credit.

Which exits suit auction purchases?

The most common are refurbish-and-refinance once the property is lettable, and refurbish-and-sell. Both depend on the works finishing on time. If the property needs structural work or conversion, read heavy refurbishment loans. For timescales, see how fast can I get a bridging loan, and for every charge, bridging loan costs and fees.

Is this regulated or unregulated bridging?

Occupancy is the legal dividing line. If you or a close family member live in, or will live in, the property as a home (the usual test is at least 40% of it), the loan is likely to be a regulated mortgage contract, with affordability checks, consumer protections and usually a maximum 12-month term. BridgingLoans.online is an introducer, not an FCA-authorised broker and not a lender: where occupancy is yes, we pass a complete pack to an FCA-regulated broker, who explains the protections that apply. Investment, commercial, vacant buy-to-let, land and many company or SPV files are often unregulated. Either way the figures here are indicative only and this is not advice or a product recommendation. See regulated bridging and unregulated bridging.

Your home or property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.

Indicative estimate only. Not a quote, illustration under MCOB, or offer of credit. BridgingLoans.online is a trading name of PASECOM GROUP LTD (company 17139327, ICO ZC117546), an introducer, not a lender. Email hello@bridgingloans.online.

Last reviewed: 4 October 2026.