Question 1

Can I use a standard mortgage to buy a property at auction?

Accepted Answer

It depends on the type of auction. At a traditional unconditional auction, you exchange contracts the moment the hammer falls and must complete within 28 days. Standard mortgage offers typically take 2–6 weeks to arrange after a formal valuation, making them extremely difficult to use within the 28-day completion window. Most buyers at traditional auctions use bridging loans or cash, then refinance onto a standard mortgage once the property is secured. At a conditional auction (also called a modern method of auction), the winning bidder pays a reservation fee and has 56 days to exchange and complete — enough time in most cases to arrange a standard mortgage, subject to the property passing a valuation and meeting the lender's eligibility criteria.

Question 2

What is a bridging loan and how does it work for auction purchases?

Accepted Answer

A bridging loan is short-term finance — typically 1–18 months — designed to bridge a gap where speed is essential and a standard mortgage cannot be arranged in time. For auction purchases, a bridging lender can agree a loan in principle before the auction and release funds within days of the hammer falling, meeting the 28-day completion deadline. Interest on bridging loans is typically charged monthly and rolled up into the final repayment rather than paid monthly. The critical requirement is a clear exit strategy: the borrower must demonstrate how they will repay the bridge, usually by refinancing onto a standard mortgage once the property is habitable and mortgageable, or by selling. Bridging rates are significantly higher than standard mortgage rates — typically 0.5–1.5% per month — making the exit timeline the most important cost driver.

Question 3

How much deposit do I need to buy a property at auction?

Accepted Answer

At a traditional auction, the winning bidder must pay a 10% deposit on the day the hammer falls — this is non-negotiable and non-refundable if you cannot complete. The remaining 90% (less any agreed bridge amount) must be paid on completion, typically within 28 days. At a conditional auction, the reservation fee is usually 3–5% of the purchase price and is also non-refundable if the sale falls through after reservation. Bridging lenders typically lend 65–75% LTV on auction properties, so a meaningful cash deposit is required. For properties requiring renovation or in poor condition, lenders may restrict LTV further, or decline entirely — which is why pre-arranged bridging finance with a clear exit is essential before bidding.

Question 4

What is a conditional auction and how does mortgage finance work for it?

Accepted Answer

A conditional auction (modern method of auction) allows the winning bidder to secure the property with a reservation fee and then complete the purchase within a longer window — typically 56 days — rather than the 28 days required at a traditional auction. This extended timeline makes conditional auction purchases compatible with standard residential mortgages in most cases. You will need a mortgage in principle before bidding to confirm borrowing capacity, and the formal mortgage offer process — including surveyor valuation — must complete within the 56-day window. Risks: the property must meet the lender's standard valuation and condition requirements. Properties that need substantial work before they are habitable may not be mortgageable even at a conditional auction, in which case bridging finance remains the only route.

Question 5

Can I get auction finance with complex or self-employed income?

Accepted Answer

Yes. Bridging lenders assess the security (the property) and the exit strategy (how you will repay) more heavily than income compared to standard mortgage lenders. Some bridging lenders will accept self-employed income, contractor day rates, or complex income more flexibly than mainstream mortgage lenders, particularly for short-term finance where income serviceability is secondary to the exit route. If the exit is a standard mortgage, you will still need to satisfy the standard mortgage lender's income criteria at the point of refinancing. For conditional auction purchases on standard mortgages, the same income assessment applies as any residential mortgage: SA302s, tax year overviews, and accounts for self-employed applicants. Plan the exit strategy and confirm mortgage eligibility before bidding.

Question 6

What happens if my mortgage or bridging finance is delayed and I miss the auction completion deadline?

Accepted Answer

Missing the completion deadline at a traditional auction is serious: you risk losing your 10% deposit and may be liable for the seller's costs and any difference if the property is re-sold for less. At a conditional auction, missing the 56-day deadline forfeits the reservation fee and may expose you to further claims depending on the contract terms. Prevention is critical: arrange bridging finance or a mortgage in principle before bidding, instruct solicitors immediately after winning, and order the survey the next working day. If delays arise, engage the seller's solicitor early — extensions are sometimes agreed but are not guaranteed and typically require the seller's consent. Never bid at auction without finance pre-arranged.

Property Auction Mortgage FAQ