Auction finance is an alternative term for bridging loan or short-term finance. It can be arranged extremely fast and therefore suits the purchasing timescales of auction properties.
If you go to buy a property at auction, you will be required to pay a 10% deposit on the day once you have won the auction and the balance within about 28 days. The route taken by many is to arrange Auction finance.
How does auction finance work? Auction finance works by arranging all your funding in advance. Typically, it takes 8-12 weeks to buy or sell a property under usual circumstances which means the timeframe for auctions is much shorter, potentially making it more difficult to pull together the required funds.
Auction finance rates are usually capped at 70-75% of the purchase price so you will still need a deposit of 25-30% at least.