How auction timescales work
At a traditional auction, contracts exchange when the hammer falls. You pay the deposit straight away, along with any buyer's premium or administration fee, and the remaining balance is due on the completion date in the contract, typically 28 days later. Some auctions set a different period, so always read the conditions of sale.
Under the modern method of auction, the buyer usually pays a reservation fee and has a set period, often 28 days, to exchange, followed by a further period to complete. The timings are more relaxed, but the reservation fee is often non-refundable.
If you fail to complete on time, you can lose your deposit and face further claims from the seller. That is why finance has to be in hand before you bid.
Why bridging is used
Auction finance is bridging used for auction purchases. Bridging lenders can work to a 28-day timetable because they assess the property and the exit rather than long-term affordability, and because they will lend on property in poor condition, which is common in auction lots.
Many buyers use the bridge to complete, then refinance onto a mortgage or sell after refurbishment. The plan for that exit should be clear before bidding. Our guide to exit strategies explains what lenders look for.
What to do before the auction
- Read the legal pack, ideally with a solicitor, for title issues, leases, special conditions and any extra costs payable by the buyer.
- View the property, and consider a survey where access allows.
- Work out your maximum bid including the deposit, buyer's fees, stamp duty, legal costs and the cost of the bridge.
- Compare lenders and get indicative terms for the lot, so you know the likely loan to value and net advance.
- Where possible, have the lender's valuation instructed before the auction, or line up a lender that can value quickly after it.
- Instruct a solicitor experienced in auction and bridging work.
Starting early is the single biggest factor in completing on time.
Deposit and how much you will need
The auction deposit is paid from your own funds on the day. The bridge then funds part of the balance, usually up to 70% to 75% of the lower of the price and the valuation. Because the deposit is often 10% and the bridge rarely funds 90%, you typically need further funds on completion, plus costs.
If you own other property with equity, some lenders will take it as additional security to increase the loan. Our guide to bridging deposits shows how to calculate your cash requirement, and stamp duty and bridging covers the tax side.
Common pitfalls
- A valuation below the hammer price, which reduces the loan. Leave room in your budget.
- Problems in the legal pack, such as a short lease or missing title documents, that a lender will not accept.
- Unusual property types, such as flats above commercial premises or non-standard construction, that narrow the lender list.
- Leaving finance until after the auction, which compresses an already tight timetable.
To see which lenders on our panel fit a lot before you bid, use Instant Quotes and choose auction purchase.
Common questions
How long do you have to complete at auction?
Usually 28 days at a traditional auction, but the conditions of sale set the exact date. Modern method of auction timings differ.
Can I get a mortgage for an auction property?
Sometimes, but most mortgages cannot reliably complete within 28 days, and many auction lots are not mortgageable in their current condition. Bridging is commonly used instead.
What happens if I cannot complete on time?
You can lose your deposit and face further claims from the seller. That is why finance should be prepared before you bid.
Should I get the valuation done before the auction?
Where the lender and auction timing allow, yes. It confirms the loan amount and removes the biggest source of delay after the hammer falls.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
