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Auction Finance: Meeting the 28-Day Deadline
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Auction finance is short-term property lending that helps a buyer complete an auction purchase within the deadline in the auction terms. Where an auction uses the RICS Common Auction Conditions, completion is 20 business days after the auction unless the conditions say otherwise, which is about four weeks. It suits limited companies, LLPs and partnerships of four or more partners buying commercial or semi-commercial property, who could otherwise lose their deposit.
Why auction purchases need specialist finance
At a traditional auction the contract is binding when the hammer falls. You pay a deposit, normally 10%, and must complete in the time set by the conditions of sale. Under the RICS Common Auction Conditions that is 20 business days after the auction, although it can be longer or shorter, so check the special conditions for each lot (RICS property auctions consumer guide). A conditional auction usually gives you longer.
If you do not complete after a notice to complete, the Common Auction Conditions let the seller end the contract, keep the deposit, resell the property and claim damages from you (condition G7, see an auction house's published copy of the Common Auction Conditions).
A standard commercial mortgage can take longer than that to arrange. Auction lenders are set up to work to the deadline. They focus on the property and how the loan will be repaid, rather than a long review of your trading history.
How the timeline runs
The clock starts when the hammer falls. Business days exclude weekends and bank holidays, so 20 business days is roughly four calendar weeks.
Some work can be done before the auction and some can only be done after it. Before the auction you can get terms agreed in principle, have your solicitor review the legal pack and give the lender details of the lot. After you win, the lender instructs its valuation and legal checks, issues a formal offer and releases the money. Auction lenders do the valuation and legal checks at the same time, not one after the other, which is how they finish in time.
What auction finance costs
Auction finance is usually priced as a monthly interest rate, plus an arrangement fee and the lender's legal and valuation costs. Some lenders also charge an exit fee or a minimum interest period, so you pay for a set number of months even if you repay early. Rates depend on the lender, the property and how much you borrow against its value. For context, the Bank of England base rate is 3.75%, last changed on 18 December 2025 (Bank of England). Short-term property loans cost well above this.
Ask each lender for the total cost of the loan for the time you expect to hold it, including every fee, not just the monthly rate.
Eligibility for limited companies and LLPs
For limited companies, LLPs and partnerships of four or more partners, lenders look mainly at the property and how the loan will be repaid, rather than years of accounts. This can suit a business buying its first premises or an investment property. Lenders will still check Companies House records, confirm the identity of directors or members, and ask how the loan will be repaid: by a mortgage, a sale or business income.
A company set up just to hold the property, with no trading history, may still qualify. The lender will usually want a personal guarantee from a director, and will set a limit on how much it lends against the property's value.
Auction finance vs standard bridging
Auction finance is a type of bridging loan built around the fixed completion date. Standard bridging is used for a negotiated purchase, where the buyer and seller agree the completion date, so there is usually more time. The main difference is how the lender works: an auction lender agrees terms in principle before the sale and runs its checks quickly after it.
Before you rely on any bridging lender for an auction purchase, ask it to confirm in writing that it can complete within the deadline in the conditions of sale.
Exit routes once the purchase completes
Most borrowers repay auction finance by moving onto a commercial mortgage once the property has an up-to-date valuation or income that supports one, or by selling the property after any work is done. How long that takes depends on the property and the plan.
Lenders will ask for the repayment plan in writing before completion. A vague plan can lead a lender to turn the application down, even when the property and deposit are fine.
Common pitfalls at auction
Bidding before finance is agreed in principle is a serious risk, because the contract is binding at the fall of the hammer. Buyers also get caught out by costs on top of the price and deposit. These include stamp duty land tax, legal fees and any buyer's premium or other charges, which the auctioneer must disclose in the conditions or the auction material.
Have your solicitor review the legal pack before you bid, including title, planning and any tenancy. A lender may decline or change its offer if problems in the pack come to light after the auction.
| Stage | Example timing | What happens |
|---|---|---|
| Before the auction | 1 to 2 weeks before | Terms agreed in principle, legal pack reviewed, lender given details of the lot |
| Auction day | Hammer falls | Contract becomes binding, deposit paid, the completion clock starts |
| Week 1 to 2 | After the auction | Valuation and legal checks done at the same time, loan offer issued |
| Week 2 to 3 | After the offer | Loan documents signed, lender ready to release funds |
| Week 3 to 4 | By the completion date | Completion, balance of the price paid |
This is an example only. Your deadline is the one in the conditions of sale for your lot.
Step-by-step
- Agree terms in principle with an auction lender before you bid, based on the lot's guide price and the lender's lending limit.
- Have your solicitor review the legal pack and give the lender details of the lot before the sale.
- Bid and buy at the auction. The contract is now binding and the completion clock starts.
- Send the lender your identity, Companies House and repayment plan documents straight away.
- Let the lender complete its valuation and legal checks, then sign the loan documents.
- Complete by the date in the conditions of sale, then put your repayment plan into action.
Illustrative example
This is a made-up example. A trades business set up as an LLP buys a semi-commercial unit at auction for £310,000. It plans to use the ground floor and let the flat above. Before the auction it agrees terms in principle for a loan of 68% of the price, about £210,800. The lender's valuation and legal checks run at the same time after the auction, and the purchase completes before the deadline. Nine months later the LLP moves onto a commercial mortgage and repays the auction loan.
Frequently asked questions
What happens if I can't complete on time?
Under the RICS Common Auction Conditions, once the completion date has passed the seller can serve a notice to complete, giving ten business days. If the buyer still does not complete, the seller can end the contract, keep the deposit, resell the property and claim damages from the buyer. Damages can include a loss if the property resells for less. Always check the conditions of sale for the lot you are buying.
Can a newly formed limited company get auction finance?
Often, yes. Some auction lenders will lend to a company set up just to hold the property, even with no trading history. They usually look at the property and how the loan will be repaid, and may ask a director for a personal guarantee.
Do I need finance agreed before I bid?
Yes, you should. At most auctions the contract is binding when the hammer falls, with no condition that lets you pull out if your finance fails. Get terms agreed in principle, based on the legal pack, before the auction day.
How does auction finance differ from a bridging loan for a normal purchase?
Auction finance is a type of bridging loan arranged around the fixed completion date in the auction terms. The lender does its valuation and legal checks at the same time, not one after the other, to finish in time. Bridging for a normal purchase works to a completion date the buyer and seller agree, so there is usually more time.
How much will a lender lend against a commercial auction property?
It depends on the lender, the type of property, where it is and its condition. Properties that need a lot of work usually get a lower loan as a share of the value. Ask each lender for its limit for the specific lot.
How is auction finance repaid?
Usually by moving onto a longer-term commercial mortgage once the property has an up-to-date valuation or income that supports one, or by selling the property. The lender will want this plan set out before it lends.
By Adam Parker. Published · Last updated .