How buying at auction works in the UK
At a traditional UK auction, contracts are exchanged when the hammer falls. You usually pay a 10% deposit on the day, often with a minimum such as £5,000, plus the auctioneer's buyer's premium and administration fee. Completion normally follows within 28 days, and if you cannot complete you can lose the deposit.
A standard mortgage is rarely fast enough for a 28-day completion, so many buyers use a bridging loan arranged before the auction. The lender typically advances up to about 70% to 75% of the price; you fund the deposit, the rest of the price and the costs.
The fees on top of the hammer price
Buyer's premiums at UK auctions are commonly 1% to 3.5% of the hammer price, and VAT at the standard rate of 20% is added, so a 1.5% premium costs 1.8% in total. Administration fees typically range from about £195 to £1,200 including VAT. Read the auction's special conditions: some add fees for searches or the seller's legal costs.
You also need legal fees, a survey and Stamp Duty Land Tax at completion. Enter them under Other purchase costs. Stamp Duty depends on the price and your circumstances, including the higher rates for additional properties.
Worked example: a £200,000 auction purchase
You win a property at £200,000 with a 1.5% buyer's premium and a £1,000 admin fee. On the day you pay a £20,000 deposit, a £3,600 premium (£3,000 plus £600 VAT) and the £1,000 fee: £24,600.
The bridging lender advances 75% of the price, £150,000, at 0.85% a month for 12 months, rolled up and compounded monthly, with a 2% arrangement fee of £3,000 paid separately. At completion you pay the remaining £30,000 of the price, £1,500 of other costs and the £3,000 fee: £34,500. In total you need £59,100 of your own cash.
Interest over 12 months is £16,035.93, so £166,035.93 is repaid when you sell or refinance. The loan costs £19,035.93 including the fee, and the total cost of buying, with the price, premium, fees and other costs, is £225,135.93.
Arrange the finance before you bid
Ask a lender or broker to agree terms in principle before the auction and read the legal pack, because a problem found after exchange still has to be completed within the deadline. Check whether the lender's limit is based on the purchase price or its own valuation, which may be lower.
Plan the exit as well: a sale or a refinance onto a buy-to-let or commercial mortgage. If refurbishment is needed before a mortgage lender will lend, consider a refurbishment loan instead.
Work out the Stamp Duty to include in Other purchase costs with the Stamp Duty calculator .
To check your loan to value on a net or gross basis, use the UK bridging loan LTV calculator .
Use the right country page
This page stays in pounds and uses UK auction rules: a deposit on the hammer price, VAT on the buyer's premium and completion in about 28 days. The country choices above the inputs open separate local pages. Choosing United States opens the US auction property loan calculator, where the premium is added to the bid and earnest money is a share of the purchase price. The inputs reset and amounts are not converted.
Inputs for the auction bridging loan calculator
Hammer price
The winning bid, which is the contract price at a UK auction.
Buyer's premium
The auctioneer's premium as a percentage of the hammer price. VAT at the standard rate is added automatically.
Auction admin fee
Fixed fees charged by the auctioneer, including VAT. Enter zero if none.
Deposit at auction
The share of the hammer price paid on the day, usually 10%.
Minimum deposit
Many auctions set a minimum deposit, such as £5,000, which applies when 10% would be less.
Other purchase costs
Legal fees, survey and Stamp Duty paid at completion.
Loan up to
The share of the price the bridging lender advances. It never exceeds the balance left after the deposit.
Quoted interest rate
The rate in your quote, not the APR. UK bridging is usually quoted per month.
Rate quoted per
Month for a monthly rate. Year (nominal) divides an annual rate by twelve; Year (effective) converts an effective annual rate.
Term
The months you expect to keep the loan before selling or refinancing.
How interest is paid
Rolled up or deferred to the end, retained up front, or serviced monthly.
Arrangement fee
The lender's fee as a percentage of the loan advance.
Arrangement fee payment
Paid separately adds to the cash due at completion; deducted from the loan does not.
Exit fee
A percentage some lenders charge when you repay. Enter zero if there is none.
CALCULATOR QUESTIONS
UK auction bridging loan calculator questions
How much deposit do I need at a UK property auction?
Usually 10% of the hammer price on the day, often with a minimum such as £5,000, plus the buyer's premium and admin fee.
Is VAT charged on the buyer's premium?
Yes. UK auctioneers add VAT at the standard rate of 20% to their buyer's premium, and admin fees are often quoted including VAT.
How long do I have to complete?
Usually 28 days from the auction, but check the special conditions in the legal pack, as some auctions set a different period.
How much can a bridging lender lend for an auction purchase?
Typically up to about 70% to 75% of the price or the lender's valuation, whichever is lower. You fund the rest and the costs.
What happens when I change country?
The United States option opens the separate US auction property loan page, in dollars, with its own rules. Your inputs are reset rather than converted.