Buying at auction with a bridging loan: working to the completion deadline

Buying at auction is different from a normal purchase in one important way: the deadline. When the hammer falls, the contract is typically binding straight away, a deposit is usually due on the day and completion is often required within about 28 days. A standard mortgage can struggle to run to that timetable, which is why bridging is a common way to fund an auction purchase. It only works well if you plan it before you bid.

Do the groundwork before auction day

Read the legal pack as soon as it is published, and have a solicitor review it. Check the title, any leases, planning matters and special conditions, because you are usually committed to them once you bid. Get a lender's view in advance, so you know your ceiling before bidding starts.

The deposit and the completion date

The deposit is normally paid from your own funds on the day, so it needs to be available immediately. The balance is due on completion. Check the stated completion date in the auction conditions and work backwards: valuation, legal work and the release of funds all have to fit inside it. Missing it can mean penalty interest and the loss of the deposit.

What the lender will look at

A bridging lender looks at the property, as security, and at your exit. Many auction properties are in poor condition or need work, so a lender may value the property in its current state and will want to understand what you plan to do with it. Be ready to explain whether you intend to refurbish and sell, or refinance onto a longer-term loan, and show why that exit is realistic.

Costs to allow for

Beyond the deposit and the loan itself, budget for the lender's fees, valuation, legal costs on both sides, stamp duty land tax where it applies and the buyer's premium some auction houses charge. Add them up in advance rather than relying on the purchase price alone.

A sensible way to prepare

- Arrange your finance indication before the auction, not after. - Set a maximum bid that leaves room for costs and a delay. - Keep a fallback exit in case the first one takes longer than planned.

Bridging loans start from £75,000 and run from 1 to 24 months, so the term can be matched to the works and the exit. Cubik AI can show an indicative illustration for a bridging case, and you can run it again with different figures as your plans firm up. It is indicative only, and a broker reviews every case before anything proceeds.