How to Secure a Bridging Loan for Auction Property in the UK

Purchasing property at auction requires speed, certainty, and access to short-term capital.

A bridging loan for auction property is a fast and flexible finance option that allows investors to complete property purchases within the strict 28-day window typically required after an auction day.

Whether you are buying through a limited company, investing in a buy to let, or purchasing a semi-commercial property, bridging finance offers a tailored solution where traditional mortgages may fall short.

The article is updated as of June 30, 2025.  Bridging loans are a form of short-term secured borrowing and may not be suitable for everyone—failure to repay on time can result in the loss of your property. Bridging loans are available by referral only

What Is a Bridging Loan for Auction Property?

A bridging loan is a short-term lending option used to bridge the gap between the purchase of a property and the availability of longer-term finance. In the context of property auctions, this means completing quickly while awaiting either a buy-to-let mortgage, development loan, or the sale of another property.

These loans are often used when the property chain is broken, or the asset is unsuitable for a traditional commercial mortgage or residential mortgage at the time of purchase. This could include properties requiring refurbishment, those without full planning permissionPermission granted by the local authority for a property to ..., or Houses in Multiple Occupation (HMOs).

A bridging loan for auction property allows you to:

• Complete your purchase within the auction’s 28-day deadline
• Leverage real estate opportunities at below market value
• Fund projects with no principal and interest repayments during the term

How Bridging Finance Works for Auction Purchases

Step-by-Step Process

1. Get a Decision in PrincipleA preliminary decision by a lender to offer a mortgage, base...
   Before the auction date, secure a Decision in Principle (DIP) from a lender. This indicates how much you may borrow based on your credit history, income, and assets.
2. Attend Auction and Make a Winning Bid
   On auction day, successful bids require a 10% deposit and legally bind the buyer to complete the transaction within 28 days.
3. Submit Application and Valuation Checks
   After your auction win, your broker will submit the full application. Lenders carry out valuation checks, which may include automated valuations, desktop valuations, or a physical inspection by a RICs surveyor. A valuation report is produced, and a valuation fee is payable.
4. Legal Documentation and Conveyancing Process
   Solicitors begin the legal process using the auction legal pack, including title deedsLegal documents that prove ownership of a property., local searches, and a report on title. A conveyancing solicitor or firm like Elite Law Solicitors may handle this, operating under the Law Society’s Conveyancing Quality Scheme.
5. Funds Released and Property Purchased
   Once the lender decision is made, funds are released to your solicitor. You can complete the purchase and take ownership.

Related: Bridging loan repayment terms

Benefits of Bridging Loans for Auction Finance

• Fast Lending Decisions: Funds can be released in 5–10 days with pre-approval.
• No Monthly Repayments: Most loans offer interest-only payments, or retained interest, paid at the end of the term.
• Flexible Security Options: Borrowers may use collateral properties to secure the loan.
• Adaptable Structures: Bridging loans can be arranged for limited companies, residential investments, or commercial buildings, including high-rise developments.

Learn more: Bridging loan for property flip

Understanding Interest Rates and Costs

Interest rates on bridging finance can vary significantly depending on:

• Loan term (typically 3–12 months)
• Loan-to-value (LTV) ratio
• Credit checkA check of a borrower's credit history, which is used by mor... results
• Type of property (residential, commercial, Buy to Let, or semi-commercial)
• Exit strategy and risk level

You may also incur:

• Valuation fees
• Lender legal fees
• Arrangement fees
• Exiting fee (if applicable)
• Conveyancing costs

Key Bridging Loan Requirements

• Exit Strategy: Required by all lenders. Could include sale, Buy to Let mortgage, or refinance to a long-term loan.
• Strong Application: Including asset details, income, and an Offer in Principle.
• Credit History: Imperfect credit may be acceptable but can affect rates.
• Property Valuation: Completed by a RICs surveyor.
• Refurbishment Plans: Required for properties needing work.
• Legal Advice: Work with a conveyancing solicitor experienced in auction finance.

Related: Cons of a bridging loan

Common Mistakes to Avoid

• Attending an auction without finance arranged
• Underestimating purchase costs, including legal fees and taxes
• Choosing the wrong exit strategy
• Not understanding the terms of your lender’s offer
• Ignoring local authority legislation that may affect future use

Learn more: Bridging loan options

Frequently Asked Questions

Can I use a bridging loan to buy an auction property?

Yes. Bridging loans are commonly used to complete time-sensitive auction purchases. They are suitable for various types of properties, including those needing renovation or ineligible for a standard mortgage.

How quickly can bridging loan funds be released?

Depending on your application, property type, and the specialist team managing it, funds can be released within 3 to 10 days after auction day.

What is the typical interest rate for auction bridging loans?

Interest rates vary by lender, but most start from around 0.55% to 1.5% per month. Rates depend on your credit profile, property valuation, and loan size.

Do I need a solicitor for auction finance?

Yes. A conveyancing solicitor or bridging loan solicitor is essential to manage the legal documentation, ensure the lender’s requirements are met, and complete within the required time frame.

Can I use a bridging loan as a limited company?

Yes. Many Buy to Let and commercial mortgage borrowers structure purchases through a limited company for tax efficiency and portfolio flexibility.

Call to Action

If you are planning to purchase a property at auction and need a fast, flexible funding solution, our experienced advisers can help. We offer access to a range of bridging loan options for individuals, companies, and investors across residential and commercial mortgages. Contact our specialist team today for tailored guidance and fast decisions.

Visit: Bridging loan options