Do I have to be a cash buyer to buy at auction?


Written by: Edward Feather on 4th October 2023

Cash buyer

When planning to purchase a property at auction in the UK you might ask yourself, ‘Do I have to be a cash buyer to buy at auction?’ and many people assume that this is the case. However, thankfully the answer is no. Indeed, buying at an auction with finance – such as a mortgage – is completely fine and in fact very common.

Some participants in property auctions choose to pay in cash, usually meaning they have the available funds to buy the property outright at the moment they register a winning bid and they also have cash or funds in their bank to cover all other costs associated with the transaction. But there are also many other buyers at auction who finance their purchases through a mortgage, whether they are
first time buyers, buying a new home or are investors buying-to-let.

Pre-arranging a mortgage for a property you aim to buy at action is not overly complicated. The mortgage lender will usually need assurance that you have relevant savings to cover the cost of the expected deposit and will then assess your ability to pay a mortgage up to a specific budget limit.

The lender will carry out credit checks and will need documents such as employment contracts, pay slips, and potentially further information from your solicitor and a surveyor in order to approve the mortgage. They may wish to review the legal pack relating to a property you intend to bid on, or may request specific documentation on the property from you and/or your solicitor.

Lenders typically seek confirmation that you will only be bidding on mortgageable properties – e.g. properties that is viable them for to lend you money to finance the purchase of.

At auctions there are different types of property sales, known as unconditional sale and conditional sale. At Pugh, we only offer an unconditional sale whereby the standard procedure is that you would be expected to pay a deposit of around 10% and pay the remaining balance within 21 to 28 days following the auction. 

Remember that there are some other specific costs to keep in mind when buying at an auction, in addition to the cost of the mortgage to cover the price of the property. Some of these costs cannot be covered by financing, so you will need some accessible funds to pay for them.

The deposit on the property (which is due as soon as a successful auction bid is accepted and is usually around 10% of the sale price), solicitor’s and surveyor’s fees, documentation costs, buyer’s Premium auction fees, Stamp Duty, mortgage arrangement costs, house insurance (if you successfully bid for a property you become liable for the insurance from the moment the auction ends) and any renovation costs to improve the property once purchased.

You may also need to account for travel costs if you’re visiting the property for a viewing or the area around the property for research before the auction.

If you are looking to buy property at auction and have any questions, our expert team are here to help. To see what properties we currently have for sale, follow this link.

Ed Edward Feather

Associate Director

About the Author

Edward is an experienced property auctioneer with over 15 years' property auction experience and considerable knowledge of the North West property market. 

Edward joined Pugh & Co in September 2018 from SDL Auctions in Chester. He was also a Director at the Cheshire and North Wales franchise of the Auction House business, based at estate agent Humphreys in Chester, before its acquisition by SDL in 2016.