Bridging finance for auctions

The quick route to winning the gavel

UK property auctions are gathering pace, and the numbers show why speed matters. Recent data points to an 8.7% rise in auction lots and £380.8 million raised, with commercial stock surging alongside solid residential interest. Mortgage markets are steadier, but sellers still prefer certainty. That is where bridging finance comes in - rapid funding designed to complete in days, not months, so you can exchange on time and protect your deposit.

Rates are trending down. Average bridging rates fell to around 0.81% per month in Q2 2025, the lowest in over a year, while lenders reported an 11% rise in applications and strong confidence for further growth. Processing is also faster. Industry figures show average processing times dipping to around 32 days in early 2025, with many completions from formal offer in roughly 43 days. For auctions with 28-day completion deadlines, that speed can make the difference between a successful bid and a costly fall-through.

This is not just for developers. Investment purchases have climbed to nearly a quarter of bridging activity, reflecting buyers using auctions to expand portfolios, convert commercial units, or secure HMOs. Equally, homeowners use bridging to buy before they sell, or to fix a broken chain. Exit strategies are clear too: roughly three-quarters of borrowers repay by selling the property, with a sizeable share refinancing onto buy-to-let mortgages once works are complete.

Bridging is specialist finance, so clarity is crucial. You borrow against the property at a set monthly rate, typically with interest rolled up. The loan is repaid via a sale or refinance within a defined term. With competition increasing and product innovation widening - including options that remove valuations in select cases - buyers are finding sharper pricing and faster decisions. For auction lots that are below market value or require refurbishment, a well-structured bridge can provide a clean, credible path from hammer down to completion.

Understanding APR is not just about percentages - it is about what you will pay in real terms over the life of the loan.

In short, bridging finance gives you the certainty, speed, and flexibility to act when the right auction opportunity appears - and to do so with a clear plan for costs, timeframe, and exit.

Who benefits most

If you intend to buy at auction and need to complete within 28 days, bridging finance is designed for you. It suits investors targeting below-market lots, buyers who plan light refurbishments before a quick sale, and landlords converting to buy-to-let once works are done. It also helps home movers secure a property before their current sale completes, avoiding chain risk and potential fall-through costs.

First-time auction bidders can use bridging to provide proof of funds and answer a seller’s need for certainty. Experienced developers can leverage it for commercial conversions or HMOs where traditional mortgage processing is too slow. With average loan-to-value around 50% to 65% and flexible terms, it offers a pragmatic route to move quickly while preserving cash for deposits and works.

Your funding choices at a glance

1. Standard bridging loan - fast, short-term funding for 6 to 18 months.

2. Regulated bridge - for purchases of your main residence or chain repair.

3. Unregulated bridge - for investments, refurbishments, and developments.

4. Light refurbishment bridge - finance for improvements that do not require major structural changes.

5. Heavy refurbishment or conversion bridge - for structural works and commercial-to-residential projects.

6. Auction finance with AVM or no-valuation options - selected cases for faster completion and reduced upfront costs.

Price, impact, returns, and risks

Can you qualify

Bridging lenders assess the asset and the plan as much as the person. They will want to understand the auction lot, your intended works, and the exit route - usually a sale or a remortgage to buy-to-let once the property is lettable. Clean title, a realistic schedule of works, and credible affordability for the exit product strengthen your case. Lower LTVs typically secure better rates and quicker approvals.

Credit history matters, but it is not everything. Many lenders are pragmatic if the asset is strong and the exit is credible. Proof of deposit, ID, and solicitor details are standard. If the property is unmortgageable in current condition, a light or heavy refurbishment bridge may be suitable until it meets mortgage standards. For homebuyers using a regulated bridge, consumer protections apply and affordability for the exit is scrutinised more closely.

Kandoo can introduce you to a panel of UK lenders that move quickly on auctions, including options with reduced valuation requirements, flexible legal panels, and experienced underwriters familiar with tight 28-day deadlines.

From paddle to completion in clear steps

1. Get decision in principle - confirm budget before the auction.

2. Instruct valuation and legal work immediately after winning.

3. Provide documents - ID, proof of funds, and plans.

4. Finalise terms and fees - agree loan amount and structure.

5. Lender underwrites - property, exit, and works reviewed.

6. Sign legal documents - your solicitor coordinates exchange.

7. Draw down funds - lender completes within the deadline.

8. Execute exit - sell or remortgage before the term ends.

Quick wins and trade-offs

Read this before you bid

Success at auction starts with caution. Price discipline is everything - set a maximum bid that leaves room for fees, works, and a realistic profit or contingency. Factor in your time horizon too. Even though recent processing averages have hit record speeds, legals and valuations can still add friction, especially with complex titles or mixed-use assets. Build in contingency for unexpected refurb costs and allow extra time for marketing or tenanting before refinance. Have at least two credible exits and keep communication open with your broker and solicitor from day one. If a chain break threatens completion, a regulated bridge can prevent fall-throughs and protect your deposit. The goal is not just to complete fast, but to complete profitably and on your terms.

If not a bridge, then what

1. Traditional mortgage - lowest cost but typically too slow for auctions.

2. Development finance - for structural conversions and ground-up builds.

3. Second charge loan - raise funds against existing property to boost deposit.

4. Joint venture funding - equity partner shares risk and returns on complex projects.

Frequently asked questions

Q: How quickly can bridging complete for an auction purchase? A: Many cases complete within 2 to 4 weeks, with industry averages showing around 32 to 43 days. Early valuation and proactive legals help meet 28-day deadlines.

Q: What deposit do I need at auction? A: Most auctions require 10% on the day. Bridging typically funds the remainder up to the agreed LTV, with fees often added to the loan.

Q: How do I exit the bridge? A: The most common exit is sale, accounting for the majority of cases. A significant minority refinance onto buy-to-let once the property is lettable or after light refurbishment.

Q: What are the typical rates and fees? A: Recent market lows are near 0.81% per month, with some borrowers around 0.64% depending on profile and LTV. Expect arrangement fees of 1% to 2% plus valuation and legal costs.

Q: Can I bridge an unmortgageable property? A: Yes. Light or heavy refurbishment bridges can fund works to bring the property to a mortgageable standard before sale or remortgage.

Q: Is bridging suitable for first-time buyers at auction? A: It can be, especially for chain breaks or buy-before-sale scenarios. A regulated bridge may apply when purchasing your main residence.

How Kandoo helps you move first

Kandoo is a UK-based retail finance broker. We can introduce you to a panel of specialist lenders active in the auction space, secure competitive terms, and manage valuation and legal milestones against the 28-day clock. Our role is to streamline decisions, clarify costs up front, and help you structure a credible exit so you can bid with confidence and complete on time.

Important information

This article provides general information, not personal advice. Bridging finance is secured on property and your asset may be at risk if you do not keep up repayments. Always seek professional advice on tax, legal matters, and suitability for your circumstances.