KIS Bridging Loans
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Bridging Loans for Auction Finance

KIS Finance are independent bridging loan brokers who specialise in providing fast auction finance.

What is auction finance?

Auction finance is a type of bridging loan facility that can be used to fund property purchases at auction. These can be residential or commercial properties, land and also properties in a poor state of repair and in need of renovation.

A bridging loan is a short-term, property backed finance facility that can be arranged very quickly, making them an effective solution to funding auction purchases where you are given a short timeframe to complete.

With traditional auctions this is usually just 28 days, whereas for online auctions you are normally given 56 days.

How much does auction finance cost?

Auction finance interest rates

Bridging loans for auction purchases start at 0.47% per month.

The interest rate for auction finance is affected by:

  • The loan to value – the lower the LTV the better
  • The type of property being used as security – i.e. residential, commercial, semi commercial or land.

Auction finance upfront fees and other costs

Arrangement fees

For most bridging loan facilities, a lender’s arrangement or facility fee will be added to the loan.

This is typically around 2% of the net or gross loan amount, however for larger bridging loans over £750,000 this fee can be reduced to as little as 0.5%.

Valuation fees

For speed the bridging lenders will use automated valuations whenever possible. The costs of these are minimal, typically ranging from £0 to £200.

For some cases we can also make use of a recent valuation that may have been carried out on the security property.

Some facilities do however require a full valuation, the cost of this will be dependent on the value and also condition of the property.

This is usually the only upfront cost when you take out a bridging loan and you will pay the lender directly.

Legal fees

You will need to instruct a solicitor to carry out the legal work required the purchase the property and also the lender’s legal requirements for setting up a bridging loan. In addition the lender providing the auction finance will also require you to cover their legal costs, unless it is a facility offering free legal fees.

Legal costs will vary depending on the lender and the solicitor you choose.

Exit fee

Occasionally, an exit fee, similar to the arrangement fee, can be applied and charged when you redeem the loan.

Most auction finance facilities that we arrange do not charge exit fees.

Broker fee

Most bridging loan brokers will charge a fee for their service – we do not charge broker fees!

Already won a property at auction and need finance?

  • Impulse purchases
  • Been let down by your intended lender
  • Money you were expecting been delayed
  • Bad planning

Whatever the reason, if you have agreed to buy a property at auction and need finance to complete your purchase, then please call us as soon as possible so that we can help.

Our auction finance lending criteria

  • Loan amounts from £50,000 to £25 million
  • Loan terms from 1 to 18 months
  • Rates from 0.47% per month
  • 80% Maximum Loan to Value (Based on Open Market Value) – with no additional security
  • Borrow up to 100% of the purchase price plus refurbishment costs – with additional security
  • Fast approval - Decisions in principle within 1 hour
  • No income evidence required on loans where refinance is not the proposed exit
  • Poor credit history considered
  • Available to individuals, limited companies, partnerships, and other business structures
  • Fast completion – 48 hours is possible
  • Lending available across the whole of the UK
  • No broker fees

Auction finance bridging loans are available for

  • Residential properties - houses, bungalows and flats
  • Investment properties - Buy to lets and HMOs
  • Semi- commercial
  • Fully commercial properties
  • Development land
  • Farmland

We have a select panel of bridging lenders who are experienced in providing loans to fund auction purchases. They understand that:

  • auction finance needs to be in place and ready to complete quickly
  • properties are often in a poor state of repair and unsuitable security for many lenders
  • there may be peculiarities with the legal pack
  • gaining access to the property for inspection or survey may be difficult
  • the winning bid may not reflect the property’s true value
  • clients want the cheapest possible auction finance facility

What is the process of buying a property at auction?

Traditional Property Auctions

When you place a successful bid on a property in a traditional auction (where you go to the auction in person rather than online), you have 28 days to complete the purchase. Contracts are exchanged on the day of the auction with a minimum deposit of 10% being required on the same day.

A guide or starting price will usually be given and the vendor will often set a reserve price which is the minimum price they are willing to accept. If the property does not reach this reserve price during bidding, the property will not be sold.  However, interested buyers may be able to negotiate with the seller after the auction has taken place, especially if the highest bid was close to the reserve.

You are legally obligated to complete the purchase within the following 28 days, otherwise you will lose your deposit and possibly be faced with hefty penalties.

  • Before you bid
  • Deposit and suitable finance product in place before the auction.
    Valuation done before the auction.
    Pre-exchange legal work done before the auction.
  • Contracts exchanged same day as auction
  • Committed to purchase.
    Will lose deposit and potential other costs if you pull out.
  • 10% deposit required same day as auction
  • Deposit is not refundable unless the vendor has mislead the buyer or other certain legal issues arise
  • Completion within 28 days
  • Purchase must be completed in full within 28 days of the auction.
    If this is not done, you could face heavy penalties.

It is now also common for the vendor’s solicitor to prepare a legal pack for potential bidders to look at before the auction. This will typically include:

  • Memorandum of sale
  • Special conditions of sale
  • The local search
  • Land Registry search
  • Proof of title
  • A copy any lease affecting the property

However, you may choose to commission your own checks, rather than relying on the vendor’s legal pack. If you choose to do this, all checks should be carried out before the auction as any defects or issues identified after exchange of contracts will not release you from the purchase. The only way you will be released is if the defects found are the result of a misrepresentation from the vendor, or there are any legal issues that couldn’t have been identified prior to the exchange of contracts.

If you pull out of the purchase for no acceptable reason, the vendor is entitled to keep the deposit and resell the property. If reselling the property results in a lower price, the vendor can also claim the shortfall from you.

Modern Property Auctions

With the modern method of auction, i.e. online property auctions, then the process is a little bit different.

All interested buyers must submit their offer online in the form of a ‘bid’. With the help of the auctioneer, the seller can set rules for the auction – this includes setting a reserve price, start date and duration of the auction. This is typically 30 days or more, but can be shorter if the vendor requires a quick sale.

When you make a successful bid, you don’t have to exchange contracts immediately. Instead you will pay a reservation fee which is non-refundable if you pull out of the purchase. This is usually a percentage of the purchase price; sometimes up to 5%.

This fee covers the auctioneer’s costs and is not deducted from the overall purchase price of the property, but is added on top. This fee will also be included in the calculation of the stamp duty payable, so you will be paying stamp duty on a purchase price 5% higher than it actually is.

With this method of auction, the buyer is given a more realistic time frame to source funding and complete the purchase. You will have 28 days to exchange contracts, and then a further 28 days to complete the purchase; so you will be given a total of 56 days from the date of the auction.

The reservation fee can be refunded, but only if the sale cannot be completed due to a fault from the vendor. If the buyer pulls out before exchange of contracts, the reservation fee will be lost and the vendor can resell the property.

How does auction finance work?

As bridging loans can be arranged much faster than mortgages and other facilities secured against property, they can offer the ideal solution for fast auction purchases.

Most mortgage products will take two to three months to arrange, which means it’s very unlikely that you’ll have the money in time to complete the purchase within the 28 days required of a traditional property auction.

Bridging loans can be secured against the property you’re buying, a property that you already own, or a combination of both.

A bridging facility will allow you to purchase the property simply and quicky, as if you are a cash buyer.

What can you use auction finance for?

Auction finance can be used to purchase residential and commercial properties at auction.

Auction finance can also be used to fund any develop work you wish to carry out on the property or land before refinancing or selling it on.

There’s a number of different ways that you can use auction finance, including:

  • Purchasing a residential property to live in yourself
  • Purchasing a buy to let investment property
  • Purchasing a commercial property to operate your own business from, or to rent out
  • Purchasing a property to renovate and sell on for a profit
  • Purchasing an un-mortgageable property to renovate before refinancing or selling for a profit
  • Purchasing land with or without planning permission

100% auction finance?

You have the option to borrow 100% or more of the purchase price if you have other properties to offer as additional security.

With a bridging loan you can typically borrow up to 75% of a property’s value. Therefore if you secure the bridging loan just on the property you’re buying at auction, then you would be able to borrow up to 75% of the value of the property. Surveyors will normally value the property at the auction purchase price, which means you would need to put in at least 25% cash.

However, if you own other properties that have enough equity then you may be able to use these as additional security to increase the amount you can borrow.

When you use more than one property you can borrow up to 75% of the total value of properties being used.


  • You have successfully won a property at auction for £150,000.
  • Your home is worth £500,000 with a £200,000 mortgage.
  • The assets in total are worth £650,000.
  • You can borrow up to 75% less the mortgage.
  • 75% of £650,000 is £487,500 then you need to takeaway the £200,000 outstanding mortgage balance.
  • This means you can borrow up to £287,500 gross – enough to fund the auction purchase in full.

Auction finance after placing a successful bid

If you’ve already placed a successful bid and won an auction purchase then you will need to complete within 28 days.

This is where we can help.

Bridging can be arranged in as little as 48 hours which means we should be able to get funds to you within the required timeframe.

Please give us a call if you have already placed a successful bid and need funds within the next 28 days.

Auction finance pre-approval – bid with confidence

To save yourself any stress or worry then you should come to us before the date of the auction.

We know that time is of the essence when it comes to auctions, so we can check your eligibility and pre-approve your application before you bid.

This means you can bid with confidence knowing that your funding will be sorted.

Refinancing your auction purchase – ways to repay auction finance

A typical bridging loan term is 12 – 18 months. This will give you enough time to carry out any plans for the auction property and to arrange your exit plan for the bridging loan.

The most common methods of paying back a bridging loan are:

  • Refinancing

A typical bridging loan term is 12 months, so this will give you time to get a suitable mortgage product arranged. This could be a residential mortgage, a buy to let mortgage, or a commercial mortgage.

The mortgage facility will be used to repay the bridging lender and will be secured on the property that you have purchased.

Refinancing a property that you already own to release funds is also a viable bridging loan exit strategy.

  • The sale of the auction property

You can use a bridging loan to purchase a property at auction, carry out renovations, and then sell on to repay the bridging loan and make a profit. If you don’t have the money for renovations, then you may be able to borrow more than the value of the property you’re buying if you have additional security. This could be your home or another investment property that you own.

  • The sale of a different property

The sale of a separate property that you own can be used to clear the bridging loan facility.

  • A combination of sale and refinance

If one of these options alone isn’t enough to clear the bridging loan, then you can use a combination of sale and refinancing. For example, you could sell a property that you already own and take out a mortgage on the auction purchase.

What happens if you pull out of an auction purchase?

If you change your mind and want to pull out of an auction purchase after a successful bid, then you will be in breach of contract.

Once you’ve exchanged contracts on a property purchase, it becomes legally binding.

If you pull out of the purchase after this, then you will lose the deposit you put in and you may also be held liable for any costs incurred by the seller as a result of you pulling out of the purchase.

So, it’s important that you do all of your research before the auction and get your finances lined up so there are not any delays. Never bid on a property hoping to ‘figure it out’ afterwards.

How to prepare for a property auction

In order to ensure that you can complete an auction purchase in time, you need to make sure you are fully prepared.

Here are four things that you need to do to before going to a property auction:

View the property

You should never purchase a property that you haven’t seen in person and this applies to auction purchases too. We would recommend viewing the property twice if you can.

Conduct a survey

You may think that it makes sense to get a survey done after winning the property so you don’t waste the money if you don’t win. However, as you are legally obligated to purchase the property after a successful bid, it’s important to make sure there aren’t any issues with the property before you go to auction.

The cost of the survey will depend on what type you go for, but it will be worth it if you do discover issues with the property that would cost thousands to fix.

Instruct a solicitor

It’s important to instruct a solicitor to look over the legal pack provided for the property and to carry out the conveyancing work.

Get finances sorted

You need to decide and organise how you will finance the purchase if you win. Make sure you get a decision in principle before going to the auction – this could be for a bridging loan or a mortgage.

You also need to make sure you have the deposit ready to go as this will need to be paid on the day of the auction.

Why use an auction finance broker like KIS Finance?


Each member of our auction finance team has at least 10 years experience in bridging loans and auction finance, so you can trust us to get things right.

Access to the whole market

As an independent broker, we are not tied to any one or group of lenders. This means we can search the whole market to ensure you get the most competitive and suitable bridging loan facility.

Some lenders will also only deal with brokers and not directly with customers. This means, by using us, you will have access to a wider range of products than if you were to source your own funding.

On your side

We will be with you every step of the way to help with your application process and answer any questions or concerns you have.

We can also present your application in the best way to lenders, meaning we can boost your chances of getting accepted if there are any negative factors that could potentially affect your application.

No broker fees

Most brokers will charge a fee for their services, however, we do not!

This means you will benefit from all of our years of experience and have access to a better range of products at no extra cost to you.