Auction Finance Limits: How Your Lender Sets the Maximum You Can Bid

You are in the room with a paddle, or on the line to the auctioneer, and the lot is about to open. Headline LTV is not the figure that lets you complete.

Auction finance is a ceiling, not a stretch. Lenders strike LTV on the lower of hammer price and market value, net off fees and retained interest, and they do not fund deposit, buyer's premium or stamp duty. The cash that lands on completion is the net advance.

Miss that arithmetic and you either bid through the money or you stop too soon. In the United Kingdom completion is often 28 days from the fall of the hammer. In Singapore a mortgagee or estate auction runs to the conditions of sale, which are no kinder on timing.

How lenders set the auction finance ceiling

Underwriting starts with the asset, not with your bid. A valuation is instructed. LTV is then applied to the lower of that value and the hammer price you actually pay.

Bid below value and the hammer caps the loan. Bid above value and the valuation caps it. The extra is equity, due on completion, not later.

Gross facility is the headline. Net advance is what remains after the lender retains interest for the tenor and deducts its arrangement fee. Plan on the second number.

We can issue a term sheet in 24 hours. We underwrite against the exit, a refinance or a sale, inside a 3–24 month tenor, as set out in our lending process. Terms stay indicative and subject to valuation and due diligence.

Work a simple case. A London lot valued at £2 million, or a Singapore asset at $5 million, at 70% LTV produces a gross facility of £1.4 million or $3.5 million. That is not the completion figure.

After retained interest and fees, net cash is lower. If you then bid through the valuation, LTV does not follow you up. You fund the gap.

Cash the facility will not cover

We do not fund the auctioneer's deposit, and most lenders will not. In the UK that deposit is commonly 10% of the hammer, plus any buyer's premium the catalogue imposes. Those sums leave your account on the day, before UK auction bridging loans can complete.

The same logic applies to a Singapore mortgagee sale. The deposit under the conditions of sale is yours. That is why Singapore auction bridging loans are sized on the balance, not on the brochure price.

Stamp duty is the second cash hole, and it is easy to ignore until the bid is already in. In the United Kingdom, Stamp Duty Land Tax is payable on the purchase and is not an advance we make.

In Singapore, Additional Buyer's Stamp Duty (ABSD) can dwarf the deposit for a second property or a foreign buyer. Neither regime is funded by the facility. Build the tax into the ceiling, or do not bid.

UK catalogues often complete in 28 days. That is not a target. It is a drop-dead date.

Drawdown typically takes about two weeks once diligence starts, so the credit work has to be live before you sit down. A Singapore estate or mortgagee auction gives you the timetable in the conditions of sale. Read it, then set cash and net advance against that clock.

When a short-term facility is the wrong tool

A bridge is the right tool when you can fund deposit, premium and stamp duty from cash. The lot must take a first charge, and the exit has to be real inside the tenor. Miss either and you are using the wrong product.

We lend as a direct private lender in Singapore and the UK, to corporate and high-net-worth borrowers, against the asset and the exit. We are not a bank, and we are not bound by TDSR. That does not make every lot fundable.

It is the wrong tool when the exit is a hope, when the lot will not take a first charge, or when you need the lender to cover tax and deposit. Non-standard titles, short leases and structural defects belong in a different conversation: see auction finance for lots a mortgage will not touch.

The main risk is simple. Fail to complete and you forfeit the deposit. Complete with a shortfall and you are wiring personal cash on a deadline you cannot move.

If the lot is prime and the exit is a refinance or a sale you can evidence, the arithmetic can work. Related: how we structured finance on a London investment property. If you cannot write the bid ceiling on one line before the auctioneer starts, you are not ready to bid.