How to purchase property quickly at an auction

how to purchase property quickly at auction with a bridging loan
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    Purchasing property at auction can be an exciting experience, offering the potential to bag a bargain. However, in the fast-paced auction house environment, having access to immediate funds can be really advantageous. In this blog post, we’ll explore how bridging loans can assist you in swiftly acquiring property at auction.

    If you want to purchase property quickly at an auction, it is important that you:

    • Have finance options in place.
    • Know your limits. Especially if it goes to a bidding war.
    • Can act fast. Bridging loan funds can often be pre-approved and drawn down, so the money is in the bank before you even bid.

    Before committing to a bridging loan, it is always advisable to consult with a specialist who can provide you with tailored advice based on your financial situation and property goals.

    At One, we can help you understand the potential risks and rewards of using a bridging loan for auction property acquisition.

    Top tips for purchasing auction properties

    Before any upcoming auctions, you should do your due diligence and look at the auction catalogue to research the auction houses that will be available and identify those that meet your criteria.

    1. Attend property open days or arrange viewings. If possible, this will enable you to assess the condition of the property you are interested in. Budgeting is key, so gather information about the property by looking at the reserve price and the property’s estimated market value. You should also look at the condition and location of the property and factor in whether this is likely to be a long-term renovation project. This will help you set your maximum bid based on a fair price and your budget.
    2. Secure your finance in advance. This could be through a mortgage pre-approval, cash on hand, or bridging finance. Make sure you have funds readily available to cover the deposit required upon winning the auction, and never exceed your maximum price. Bridging loans are particularly useful at auctions, where funds need to be readily available to secure the purchase. Bridging finance provides you with the peace of mind to concentrate on the process of bidding at auction and being the successful winning bid, as opposed to worrying if the mortgage company will accept the property.
    3. Understand the auction purchase rules. This includes any procedures for bidding and any registration requirements set by the auction house. Make sure that you research the legal pack and are clear on any legal documents in regard to what you are proposing to buy. Look at any hidden pitfalls, such as hidden covenants.
    4. Decide on your bidding process ahead of time. It’s easy to get caught up in the excitement of property auctions, but it is crucial to stick to your budget on the day. You can start with a conservative bid and gradually increase if necessary. Consider using odd increments, as they might catch other interested buyers off guard. Finally, try to avoid getting caught up in bidding wars that could drive the price higher than you’re comfortable with. If bidding goes beyond your budget, have the discipline to walk away.

    What finance options do you have when purchasing auction properties?

    Having access to the right type of financing before the auction date is crucial. There are several options for finance when buying a house at auction. Whether it is all cash payments, bridge loans, auction finance, lines of credit, private lenders or traditional mortgages, each option comes with its own set of advantages and considerations.

    Having money in the bank via an all cash payment is probably the most straightforward and quickest method of purchasing property at auction. The availability to have access to draw down on these funds to purchase immediately means that you can bid confidently, knowing that you have the financial capability to buy the property. Cash payments eliminate the need for mortgage approval, speeding up the purchase process significantly.

    If you are not in the fortunate position of being a cash buyer, then there are other options available. Whilst traditional mortgages may not be as speedy, lenders will often still provide funds for auction purchases subject to a survey, legal pack, credit checks and underwriting procedures. When you purchase at auction, you exchange contracts immediately as part of a legally binding contract, so you should bear in mind that with this type of financing option, you do run the risk that you may fail to complete in time.

    Finance auction property with a bridging loan

    Bridge loans are short-term loans designed to bridge the gap between the purchase of one property and the sale of another. These loans are particularly beneficial for those who are in time-sensitive situations, such as when looking to buy a property at auction, as they provide immediate funds.

    Fast bridging finance is ideal for clients buying property at auction as the property purchase can be funded with the auction bridge loan with the potential to refinance further down the line, depending on whether the property is being refurbished, kept, or sold.

    Whatever option you choose, you will need to ensure that you have pre-arranged financing or funds available. All auctions require a deposit upfront, and the moment the hammer falls, you will be expected to exchange contracts. Therefore you need to be prepared to make a deposit payment immediately if you have the highest bid.

    Benefits of using a bridging loan at auction

    With a bridging finance loan, the finance is NOT secured on the property you are intending to purchase at auction. The financing is pre-agreed, allowing you to have greater options and increased flexibility during the auction process. For example, you may have an alternative property in mind if the first choice sells for more than your budget or surpasses the reserve price. Bridging finance provides you with this strategic advantage.

    Most people opt to take a bridging loan to buy a house at auction as it offers:

    • Flexible approach, similar to that of a cash buyer.
    • Ability to complete quickly within the timescales of the auction house.
    • Bid with the knowledge that the finance is all agreed.
    • Funds can often be pre-approved and drawn down, so the money is in the bank before your bid.

    How do bridging loans work for quick property purchases at auction?

    As discussed throughout this blog, bridging loans allow for the bidding, purchase and completion of a property at auction without the stress of traditional mortgages.

    Often with a bridging loan, the term of the loan is short, usually no more than 12 months, but allows the flexibility to complete any renovation work and incorporate additional cost. Interest is charged monthly but can often be rolled up, ensuring that a traditional method of finance can be sought in good time for refinancing.

    How can One help with quick access to bridging finance?

    When it comes to purchasing property quickly at an auction, the team at One have access to the right finance options that can make all the difference.

    With our expertise and knowledge, we can ensure we match you with the correct finance to suit your individual requirements, help you to navigate the auction landscape and swiftly secure your perfect house at auction.


    Remember that purchasing a property at auction can be competitive and fast-paced, but when that hammer falls, if you are the successful bid, then you have entered into a legally binding process.

    It is, therefore, crucial that you do your research, set clear limits, be prepared to adapt to the circumstances that arise on the auction day and have all your finances finalised beforehand.


    Will all auction houses accept bridging loan finance?

    Yes, most auction houses accept bridging loan finance as proof of funds, similar to if you had a mortgage offer to complete the purchase. If you have proof of funds and can pay the deposit or reservation fee, then you are good to go.

    Is it quicker to get a mortgage or bridging loan for auction property?

    Generally, bridging loan financing is easier and quicker to obtain when compared to a traditional mortgage. The terms of the bridging financing can be agreed weeks or even months in advance, allowing you time to select the correct purchase, with the assurance that the funds are agreed. All you now need to remember is to not exceed your maximum purchase price limit.

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

    The deposit required to buy a property at an auction is typically 10% of the final hammer price. This means that if you were the winning bidder, you would need to pay a deposit equivalent to 10% of the price you bid immediately or within a short time frame, as stipulated by the auction house.

    What happens if you buy a property at auction but can’t pay?

    If you buy a property at auction but can not pay, it can lead to serious consequences. Property auctions operate on the principle of immediate payment, so failing to fulfil your financial obligations can result in legal and financial complications.

    To avoid this, we strongly advise that you ensure that your financial funding is in place before participating in a property auction. If you would like to learn more about auction bridging loans, then contact the team at One for a free, no-obligation consultation to discuss your options.

    You may also be interested in: How to buy a property at auction with bad credit

    Picture of Mark Piper
    Mark Piper

    Mark is the senior advisor at One Commercial Loans and has a wealth of experience in bridging and property finance.

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