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Auction Finance

Property auctions offer some of the best real estate opportunities in the UK and European markets, allowing investors to secure assets at below-market value or acquire unique properties that never reach the open market. Auctions are typically encompassed by an environment of high pressure and strict deadlines and therefore you will often need a fast and reliable funding arrangement. Silver Oak Capital provides specialised auction finance solutions designed to meet the tight 28-day completion deadlines typical of auction houses. We give you the financial firepower to bid with confidence, knowing the funds will be there when you need them.
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What is Auction Finance?

Auction finance is a specific type of short-term bridging loan tailored to the logistics of buying under the time pressure of auctions. Unlike a standard mortgage, which can take months to process, auction finance is engineered for speed.

The defining characteristic of an auction purchase is the timeline. Typically, you need to pay a 10% deposit on the day of the auction and must complete the remaining 90% within 28 days. Failure to do so results in the loss of your deposit and potential legal action from the seller. Auction finance bridges this gap, providing the funds to complete the purchase quickly, giving you 6 to 12 months to either refinance onto a standard mortgage or sell the property for a profit.

Who Needs It?

Auction finance is essential for anyone looking to compete in the auction room, from seasoned developers to bargain-hunting landlords.

Investors Buying "Unmortgageable" Property

A significant portion of properties on auction are considered “unmortgageable” by high-street banks. This might be due to a lack of a kitchen or bathroom, structural issues, or a short lease. Cash buyers usually dominate this space, but auction finance levels the playing field. It allows you to buy the property, carry out the necessary works to make it mortgageable, and then refinance.

Opportunity Hunters

Even for properties in good condition, standard mortgage lenders simply cannot move fast enough to meet the 28-day deadline. If you want to snag a bargain at auction, you need a lender who can instruct valuers and solicitors with the speed necessary.

Key Considerations and Terms

Pre-Auction Approval

It is always best to have some form of provisional funding arrangement or Decision in Principle (DiP) before you engage in an auction. This gives you a pre-agreed lending limit so you don’t get carried away in a bidding war and commit to a price you cannot fund.

The Legal Pack

Every auction lot comes with a legal pack. It is vital to have this reviewed by a solicitor before you bid. Lenders will require a clean title and if there are restrictive covenants or serious legal issues hidden in the pack, even a bridging lender may refuse to lend, leaving you liable.

Exit Strategy

As with all bridging loans, the exit strategy is paramount. How will you repay the loan? Will you refurbish and sell (flip), or refinance onto a buy-to-let mortgage? Lenders need to see a viable Plan B in case Plan A fails.

Valuation

Most lenders will require a valuation. In some cases, we can arrange “desktop valuations” (automated valuations without a site visit) to speed up the process, but for properties in poor condition, a physical inspection is usually mandatory.

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How Silver Oak Capital Helps Clients

  • Pre-Auction Certainty

    We work with you before the auction date. After you provide us with the details of the lots you are interested in, we engage with suitable lenders and can provide a concrete Decision in Principle (DiP) so you know exactly what your maximum bid is and what your costs will be.

  • Rapid Execution

    Once the hammer falls, we mobilise immediately. We have strong relationships with lenders who have dedicated auction teams to prioritise these transactions. We also work with solicitors who specialise in bridging and understand that a 28-day deadline is non-negotiable.

  • Funding the Deposit

    While you usually need to put down the 10% deposit yourself on the day, in certain circumstances, if you have additional security (such as another property with high equity), Silver Oak Capital can arrange up to 100% funding of the purchase price, meaning you effectively enter the deal with no cash down.

FAQs

This is the nightmare scenario. You risk losing your 10% deposit and being sued for the difference if the property sells for less at a subsequent auction. This is why working with a broker like Silver Oak Capital is crucial. We only place you with lenders who have a track record of performing within strict auction timeframes.
Yes. This is a primary use case for auction finance. Lenders will lend on the property’s value as is, provided you have a clear schedule of works and the budget to fix the issues. They are lending on the potential of the asset, not its current habitability.
Typically within 1 to 4 hours. If you send us the auction lot number and your details in the morning, we can often give you a solid indication of terms by lunchtime. This speed allows you to make decisions on multiple lots in the days leading up to the auction.

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