When buying property quickly, especially at auction, you’ll often hear two terms used interchangeably — bridging loans and auction finance.
While they’re closely related, understanding the differences can help you choose the right product, avoid delays, and secure the best deal for your project.
Let’s break down how they compare and when to use each one.
What Is a Bridging Loan?
A bridging loan is a short-term finance option (usually 3–18 months) that “bridges the gap” between buying and selling, or buying and refinancing.
They’re used for:
- Property purchases (including auction and private sales)
- Refurbishments or conversions
- Releasing equity quickly
- Preventing broken property chains
Bridging loans are flexible, secured against property, and typically complete within 7–14 days.
What Is Auction Finance?
Auction finance is a type of bridging loan tailored specifically for auction timelines. It’s built for speed, simplicity, and certainty — allowing buyers to complete within the typical 28-day deadline (or even sooner).
Main features:
- Fast approval (often same-day decisions)
- Short terms (6–12 months)
- Focus on property potential, not condition
- Pre-approval possible before auction day
Essentially, all auction finance is bridging — but not all bridging loans are auction finance.
Key Differences at a Glance
| Feature | Auction Finance | Bridging Loan |
|---|---|---|
| Purpose | Designed for auction purchases | Broader use — purchase, refinance, or development |
| Speed | Ultra-fast (completion in 7–14 days) | Fast, but flexible (up to 3 weeks) |
| Term | Typically 6–12 months | 3–18 months |
| Pre-Approval | Decision in Principle before auction | Usually after offer accepted |
| Exit Strategy | Refinance or sale | Refinance, sale, or onward purchase |
| Property Type | Often unmortgageable or in poor condition | Can include standard or non-standard property |
When to Use Auction Finance
Use auction finance when:
- You’re buying under the hammer
- Completion must happen within 28 days
- The property needs work before being mortgageable
- You want speed and minimal admin
It’s about speed, certainty, and securing the deal fast.
When to Use a Bridging Loan
Choose bridging finance when:
- You’re not under strict auction deadlines
- You need funds for development or equity release
- You’re refinancing an existing loan or property
- You want a longer-term project timeline
Bridging loans suit strategic investors who need time to add value or sell.
Can They Work Together?
Absolutely.
Many investors use auction finance to secure a property quickly, then refinance onto a longer bridging loan if they need more time to complete works or await a better market.
This hybrid approach helps maintain momentum without losing financial flexibility.
Example of a Smart Switch
A client purchased an unmortgageable flat at auction using a 6-month auction finance product.
After completing major refurbishments, they refinanced onto a 12-month bridging loan at a lower rate — giving them time to sell strategically and avoid pressure.
Case Studies
Case Study 1 – Auction Finance for Speed
Buyer won a property at auction for £150,000.
We secured auction finance at 75% LTV and completed in 9 days.
Once the property was refurbished and revalued at £220,000, the client refinanced onto a standard mortgage.
Case Study 2 – Bridging Loan for Chain Break
Client’s home sale fell through while buying a new build.
We arranged a 3-month bridging loan secured against both properties, keeping the purchase on track.
The sale completed two months later and cleared the loan.
Case Study 3 – Hybrid Approach
Developer purchased a semi-commercial unit at auction.
We arranged auction finance to complete the purchase, then switched to a development bridge for conversion.
Project completed in 9 months, with a £72,000 profit on exit.
FAQs
Ans: Not exactly — auction finance is a form of bridging loan designed for auction purchases.
Ans: Auction finance is typically faster because it’s pre-structured for 28-day deadlines.
Ans: Yes, but you’ll need a lender that can move within auction timescales.
Ans: Auction finance rates may be slightly higher due to tighter deadlines, but both vary by lender and risk level.
Ans: Yes — this is common for projects that need extra time or funding.
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