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Property auctions are booming, but not all auctions work the same way.
Two main methods dominate the market today — the traditional auction and the modern method of auction.
If you’re planning to use auction finance, it’s crucial to understand how each works, what the timelines are, and how lenders approach them. Let’s break it down.
This is the classic, in-room or online auction where the highest bid wins when the hammer falls.
Once the gavel strikes:
Because exchange happens instantly, the buyer is legally bound to complete or risk losing their deposit.
Best for: Experienced investors, cash buyers, or those with auction finance arranged in advance.
The modern method is more flexible. It’s conducted online and allows a longer timeline to complete.
Here’s how it works:
This gives buyers more time to arrange mortgage or auction finance, but it also includes an extra cost — the reservation fee is typically non-refundable.
Best for: Residential buyers or first-time investors who need more time to arrange funding.
| Feature | Traditional Auction | Modern Method of Auction |
|---|---|---|
| Exchange | Immediately at the fall of the hammer | After offer accepted, before completion |
| Deposit | 10% on the day | Reservation fee (5%) |
| Completion Time | 28 days | 56 days |
| Buyer Type | Investors, cash or pre-approved finance | Retail buyers needing mortgage or slower finance |
| Risk of Losing Money | Lose deposit if you don’t complete | Lose reservation fee if you withdraw |
Traditional Auction:
You’ll need finance that can complete quickly — usually within 14–21 days to give your solicitor time for legals.
Bridging loans and auction finance are ideal here.
Modern Method:
Because you have 56 days, you can often use standard buy-to-let or residential mortgages. However, some lenders still prefer auction bridging if the property needs work.
Ask yourself:
If you’re a seasoned investor looking for speed, traditional auction wins.
If you’re newer or need more breathing room, modern method might be safer — though potentially more expensive.
Get a Decision in Principle before you bid — whether traditional or modern.
It gives you confidence, helps you stay within budget, and proves to the auctioneer that you’re a serious buyer.
Case Study 1 – Traditional Auction, 14-Day Completion
Investor bought a terraced property at a traditional auction for £130,000.
Auction Finance UK secured a £90,000 short-term loan within 8 working days.
The deal completed in 14 days, and the investor refinanced onto a BTL product after a light refurbishment.
Case Study 2 – Modern Method Success for a First-Time Buyer
Client found a house through a modern method auction platform.
With a 56-day window, we arranged a mainstream mortgage rather than bridging.
Completion took 42 days — no stress, no penalty, and a lower cost overall.
Case Study 3 – Developer Using Both Methods
A developer bought two flats via traditional auction (bridging finance) and another via modern method (standard mortgage).
He used the extra time from MMoA to align completions and refurb all three together, saving on build costs.
Ans: Yes — but traditional auctions usually require faster completion, so bridging or auction finance is preferred.
Ans: You pay a non-refundable reservation fee (often around 5%) instead of a deposit.
Ans: Yes. If you pull out, you lose the reservation fee and may face additional admin charges.
Ans: It’s run by estate agents and auction companies — not always under the same regulations as traditional auctions. Read the terms carefully.
Ans: Traditional auctions are more common for short-term finance, but most lenders are now comfortable funding both methods as long as timescales are clear.
(C) 2025 Auction Finance is a trading name of Mortgage Knight Ltd