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Auction Finance

What is Auction Finance?

Auction finance is another name term for a bridging loan, also known as a short-term loan (STL).

Short-term loans can be arranged quickly and is normally a quicker process than a term facility which is invaluable when buying a property at auction.

It is also good to have your finance lined up before you bid, especially as you will need to pay a 10% deposit on the day of purchase, hence the need for a bridging loan/auction finance to help fund this bid.

CPC Finance can work with you to get an Agreement in Principle from a lender (subject to valuation). This ensures that you secure funding for your needs, allowing you to bid with peace of mind.

If you are successful at auction, the exchange of contracts takes place as soon as the auction ends. You then have 28 days to complete the transaction.

 Lenders can instruct valuers and solicitors the same day if you already have an Agreement in Principle in place, it makes the process much smoother. You also know that you are going to the auction with pre-agreed, credit-backed funding. 

Please note, in some circumstances online valuation may be available. Please get in touch to find out more.

Types of funding suitable for auction purchases:

Short-term Loan (STL)

Also known as bridging loans, these can be secured at short notice and for periods ranging from a month to two years.

The security can be residential or commercial property.

If you need to carry out work on the property, you have the choice between light and heavy refurbishment products, which will depend on the amount of proposed works to be carried out.

Secured Loans

For BTL investors, secured loans or second charge mortgages provide a way to release equity from a residential or commercial property, without remortgaging so keeping your current mortgage product i.e., if you had a competitive fixed rate.

The property can be residential, BTL, or commercial. Secured loans sit behind the first mortgage and enable you to retain any first-charge mortgage. Consent may be required from the lender on the initial mortgage.

Development Finance

If you are purchasing land to build property, development finance will be the only option.

A typical set up would assist with the purchase of the land and the build costs subject to the Gross Development Value.

Light and Heavy Refurbishment Loans

You may wish to carry out works on the property.

Depending on the type of works that you intend to complete, we can source light and heavy refurbishment finance to help you successfully complete your project.


Remortgaging can be a way to release equity from a property to raise capital, which can then be used to purchase a property from auction.

Remortgage products are available for residential, BTL, and commercial properties.

Buy-to-Let (BTL)

A buy-to-let term loan may be suitable.

This would be secured for properties that don’t require extra work to be carried out before being let out.

A recent client success: sourcing finance post-auction

To invest successfully, property investors need expert support when sourcing finance.

This is just one example of a time when CPC Finance worked to help a client obtain finance in a timely manner to achieve their buy-to-let objectives following an auction.

The client attended the Dedman Gray auction and successfully bid on a property. At the time, the client had finance pending and confirmed this after speaking with CPC Finance on the day, but this finance subsequently fell through. The client called CPC Finance in order to source new funding with only two weeks remaining before completion was due.

CPC Finance worked efficiently to successfully secure the finance and indeed the purchase completed on time.

How auctions work…


Traditional auction

  • 28-day completion – If you are successful at auction, the exchange of contracts takes place as soon as the auction ends. You then have 28 days to complete the transaction. Please ensure that you have sufficient funds available for the deposit and associated costs, normally in excess of 10%
  • Live auction – Live auctions are popular nationwide allowing you to visit and bid in person.

Modern method of auction

  • 56-day completion – Fixed timescales are agreed at the start to ensure the process runs smoothly.
  • Security – The seller and buyer enter into a reservation agreement, which commits them to completing the transaction.
  • Auction finance – The 56-day completion makes this method accessible to buyers who require auction finance.
  • Bid online 24/7 – Many auction houses offer online auction events where you can bid on a property of interest through their online platforms, or over the phone.

Top Tips

When purchasing for investment you should conduct extensive research on the property before the auction. You will want to establish the potential rental income, how desirable the area is and potential local management companies, if you don’t live nearby or don’t have time to manage the property yourself.

There will be a legal pack that you should download and give to your solicitor to review. You should do this before the auction. You may also need to conduct additional searches. Ensure that you have made all the necessary enquires to the local council in regard to planning permission and legal costs that may be associated with them.

Before the auction it may be advisable to pay for a valuation to be carried out. This is to make sure that it is suitable for a mortgage. You could also attend the auction with a formal mortgage offer in hand. Also, don’t forget your ID and proof of funds when you attend an auction. You will need to show these before your bid is accepted.

Get in touch to find out more

+44 (0)1923 655441