Auction Bridging Loans

What Is an Auction Bridging Loan?

An auction bridging loan is short-term finance product, typically secured against an existing property you own, that provides the funds to complete the purchase at settlement.
It works like a standard bridging loan in structure but is specifically arranged in advance to give you confirmed funding if your bid is successful.

Here is the basic flow:

Step 1: You identify a property going to sale by tender and decide to bid.
Step 2: You have equity in your current home or investment property.
Step 3: You apply for bridging finance secured against your existing equity before the sale.
Step 4: The finance is approved and available to draw down at settlement.
Step 5: You bid knowing you can settle if you win.
Step 6: If you win, you draw down the funds to complete settlement.
Step 7: You sell up and use the proceeds to clear the balance.

It covers the gap between winning and your longer-term funding being in place whether that is the sale of your property or refinancing onto a standard home loan.

It is worth understanding the difference between an open bridge and closed bridging at this stage. A closed bridging loan has a confirmed exit date, typically because contracts are already exchanged on your existing sale. An open bridge does not have a confirmed exit date, which carries slightly more risk for the lender and may affect the terms you are offered.

How Much Can You Borrow?

This depends on the equity available in your security property and the lender’s loan-to-value requirements.

The typical calculation works like this: the lender takes the current market value of your security property, subtracts any existing mortgage balance, and lends a percentage of the remaining equity.

For residential properties, this is typically up to 75% of the net equity. For commercial, it is typically around 60 to 65%.

Example: Your existing property is valued at $900,000. You have an outstanding mortgage of $350,000.

Net equity: $550,000 Bridging finance at 75% of net equity: $412,500
If the purchase price is in that range, you may be able to fund it entirely through bridging finance. If the purchase price is higher, the bridging finance covers part of it and the balance comes from other sources.

At Quick Loans, we lend from $800 to $150,000 on property lending. For larger amounts or more complex structures, contact us directly on 0800 200 275.

Getting Approved Before You Bid: The Timeline

Timing matters. You need approval before you bid, not after.

Most lenders require a registered valuation of the security property before approving bridging finance. Arranging a valuation in New Zealand typically takes several days to a week, sometimes more depending on availability and location.

Allow at least two weeks at least two weeks before the sale date, and ideally longer. If you are three days out, you may not have enough time.

At Quick Loans, we can approve standard applications within 60 minutes during business hours. If you have a specific date in mind, contact us early to confirm whether the timeline is workable.

The Exit Strategy: How You Clear the Balance

Every arrangement has an exit strategy. For most purchases, this is one of two things.

Option 1: Sell your existing property. You sell your current home and use the proceeds to clear the balance at the end of the term. This is the most common structure.
Option 2: Refinance onto a standard mortgage. You arrange a longer-term mortgage on the new property and use that to repay the bridging finance. This works well where you have sufficient equity and income to qualify for a long-term mortgage.

Your lender will want to understand your exit clearly before approving. A confirmed listing with a realistic sale price and timeline is a credible exit. A vague intention to sort something out later is not.

What If You Do Not Win?

If you are outbid, the approval typically does not cost you anything. There is usually no drawdown fee on an unused facility, though you should confirm this when you apply.

Being outbid is common. Many buyers bid more than once before they purchase. Pre-approved finance means you can bid at the next opportunity with the same confidence.