What is Auction Finance?

Auction finance is different to an ordinary mortgage due to the short timescales in which the funds are required. Auction finance is a short term lending product that can be put in place quickly. Usually auction finance can be agreed within a few days and completion within 28 days.

Fox Davidson are award winning auction mortgage specialists. We secure mortgages for auction properties including up to 100% funding, property that needs renovating or refurbishment and ground up new build development finance.

How Does A Property Auction Work?

A property auction is the process of buying property by placing bids on a property. Bids are registered in person, by phone and online. You will purchase the property by placing the highest, winning bid. An auction house will release their catalogue prior to the auction. There is an option to make an offer and secure the property before it goes to auction. If buying at auction you bid against others for the property. As soon as the hammer goes down and you have the winning bid you must exchange contracts. 10% of the property value is paid on exchange of contracts. Completion must take place within set timescales, usually within 28 days.

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How Do Mortgages for Auction Properties Work?

Auction mortgage products will allow for works to be completed to a property and the lender will also work very quickly to meet the short timescales for completion. Mortgages for auction properties are different to normal mortgages due to the short timescales. In addition to short timescales the property will often have some unusual characteristics that stop it being sold on the open market. A property at auction may have planning in place for development. The property may need works completing to make it habitable. These characteristics make the property unsuitable for standard residential or buy to let mortgages.

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Auction Funding Options

The funding options for auction properties will depend on your intentions. Will you live in, invest in or develop the property?

Buying to live in the property.

If buying the property to live in you will require a standard residential mortgage. The issue with high street banks is that they are not set up to meet auction timescales.

If the property is not habitable and requires essential works then a high street bank will not lend.

You will need to secure a bridging loan to enable you to complete within the short timescale, complete any works and then we will refinance on to a long term normal residential mortgage. We can remortgage within 6 months.

Purchasing as a buy to let

If you intend to rent out the property, we can arrange a buy to let mortgage. The same issue applies with regards timescales.

The property must also be suitable for letting from completion.

As most property at auction will not be ready for letting, we will need bridging finance.

Bridging finance will allow you to complete quickly and can provide funds for purchase and the works to the property.

The level of works will determine the type of bridging development finance you require.

  • Leading UK broker of auction finance
  • Bridging loans from £100,000 to £100 Million
  • Immediate (same day) decisions
  • Access to the best bridging loan rates
  • No maximum age
  • 100% loan to value with additional security
  • Bridging for planning consent
  • No income proof
  • Expats and foreign nationals
  • Valuations not always needed
  • All types of property, land and construction types
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Auction Mortgage Questions

Can you get a mortgage on a house at auction?

Mortgages can be secured on houses at auction. The type of mortgage will depend on the type of property and the state of repair.

Can you get a normal mortgage on a property at auction?

It is possible to get a normal mortgage on a property at auction. A normal mortgage will struggle to meet the timescales for a property sold at auction.

Can you buy a property before it goes to auction?

It is possible to make an offer on a property before an auction. If your offer is accepted the property will be withdrawn from the auction.

Can you get a mortgage on land?

A mortgage can be secured on land with planning. See development finance for more information on securing mortgages on land.

What deposit do I need for a mortgage on an auction property?

On acceptance of your winning bid you will need to pay a 10% deposit.

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