Quick answer & what this page covers

Yes — bridging finance is frequently used to secure hotel lots bought at auction because it can provide funds faster than standard commercial mortgages. This page explains how bridging works for hotel auctions, the auction timeline and deposit rules, when bridging is suitable (and when it isn’t), what lenders will require, likely costs and LTV ranges, risks and mitigations, alternatives, and how to get a fast, no‑obligation eligibility check.

What is a bridging loan and why buyers use them at auctions

A bridging loan (or bridging finance) is short‑term secured finance typically used to “bridge” the period between purchasing an asset and moving to a longer‑term funding solution (for example, refinancing with a commercial mortgage) or sale. Bridging loans are usually secured against the property being purchased and are valued by commercial valuers.

Key characteristics relevant to hotel auction purchases:

• Speed — lenders and brokers can arrange conditional offers and funding faster than a standard mortgage process.
• Short term — typical terms range from 1 to 24 months depending on lender appetite.
• Secured on property — the hotel itself is normally the primary security.
• Flexible uses — purchase, immediate completion, short‑term refurbishments or stabilisation of a distressed asset.

Auctions often require unconditional exchange within tight deadlines, which makes bridging a logical option for buyers who need funds quickly or who plan to refinance shortly after completion.

How hotel auction purchases work — timescales & critical deadlines

Auction purchases differ from private treaty sales. Key practical points:

• Legal pack — the seller provides a legal pack before the auction; buyers should have solicitors review it in advance.
• Exchange at auction — if you are highest bidder and the lot sells, you usually exchange contracts immediately or within the same business day.
• Deposit — auctions commonly require a non‑refundable deposit on exchange, often 10% of the purchase price.
• Completion deadline — many auction houses set completion at 28 days from exchange (some shorter, some longer). The contract sets the exact period.

Suggested pre‑auction timeline (example):

1. Day -14 to -1: Review legal pack with solicitor and arrange valuation instructions.
2. Day 0: Auction — bid, exchange and pay deposit (commonly 10%).
3. Day 1–7: Finalise bridging lender terms and solicitor requirements.
4. Day 28 (or agreed completion date): Completion — remaining funds transferred and title passes.

Can bridging finance be used to buy a hotel at auction?

Short answer: yes — but only when commercial, legal and valuation factors line up. Bridging is particularly suitable where speed matters, the buyer has a clear exit plan and the hotel provides acceptable security.

When bridging is a good option

• Fast completion required (auction completion window of 7–28 days).
• Buyer intends to refinance to a long‑term commercial mortgage after purchase.
• Planned short‑term refurbishment or conversion where bridging covers purchase and works.
• Distressed sale with opportunity to add value quickly.

When bridging may not be suitable

• No credible exit strategy (no plan to refinance or sell within the bridging term).
• Leasehold complications preventing clean security to lenders.
• Legal pack reveals planning, licence or environmental problems that threaten value.
• Valuation falls below expected level, leaving insufficient LTV for lenders.

Suitability checklist (quick self‑assessment)

• Is the hotel freehold or a long‑term lease with acceptable headlease terms?
• Do you have funds for the typical auction deposit (usually 10%)?
• Is there a documented exit plan (commercial mortgage, sale or investor buy‑out)?
• Have you arranged solicitors experienced in auction purchases?
• Are management accounts, tenancy/licence details and forecast trading available?

Practical requirements lenders will expect when financing a hotel at auction

Bridging lenders and brokers will ask for a range of documents and checks before issuing an offer. Preparing these in advance speeds approval.

Documentation & checks

• Completed borrowing proposal and identification documents for directors/owners.
• Solicitor’s review of the legal pack and confirmation they will act for the purchaser.
• Valuation/survey — lenders usually require a commercial valuation (desktop or full survey depending on risk).
• Management accounts and trading history where the hotel is trading — helps with valuation and lender appetite.
• Planning, building regulation and alcohol/entertainment licence details.
• Details of existing charges on the property and confirmation of clear security.
• Exit strategy evidence — agreement in principle from a long‑term lender, sale plan or investor commitment.

Ready‑to‑apply checklist (copy/paste)

• Hotel address, tenure (freehold/leasehold) and guide price
• Auction date and completion deadline
• Solicitor contact and legal pack
• Proof of deposit funds (10% typical)
• Recent management accounts and occupancy figures (if trading)
• Planned exit route and timescale

Timescales, typical costs & LTVs for bridging loans on hotels

Timescales and costs vary by lender, complexity and the condition of the property. Figures below are indicative only.

Timescales

• Initial lender/broker response: hours to 48 hours for urgent cases.
• Formal conditional offer: 24–72 hours once documents are supplied.
• Funding/drawdown: lenders can release funds in days to weeks depending on solicitor/provider readiness and conditions.

Typical costs (indicative)

• Interest rates: bridging rates can range widely — indicative ranges might be 0.6%–1.5% per month (7–18% APR equivalent) depending on risk and lender.
• Arrangement fee: commonly 1–3% of the loan amount.
• Valuation & survey fees: from a few hundred to several thousand pounds depending on survey type and hotel size.
• Legal fees: solicitor costs for security documentation and completion.
• Exit/early repayment fees: some lenders charge an exit fee or early repayment administration fee.

LTV expectations

For hotels, lenders often apply more conservative LTVs than residential bridging. Typical bridging LTVs for hotels are often around 50–65% of value; complex or higher‑risk assets may attract lower LTVs.

If you’d like indicative pricing tailored to your hotel, start a quick enquiry: Get Quote Now.

Risks, common pitfalls and how to reduce them

Auction purchases carry auction‑specific and lender‑specific risks. Be aware and mitigate early.

Common auction risks

• Unconditional contracts — little room for subject to finance conditions once you exchange.
• Incomplete legal pack — unexpected leases, rights of way or planning constraints.
• Hidden structural or environmental issues discovered after exchange.

Lender risks

• Post‑exchange revaluation lower than expected, reducing available loan amount.
• Conditions precedent delaying drawdown (e.g., remedial works required by lender).

Mitigations

• Have a solicitor and valuer review the pack pre‑auction.
• Contact bridging brokers/lenders in advance and explain auction timeframe.
• Budget a contingency (10–20%+) for unexpected works or valuation shortfalls.
• Secure a credible exit plan and documented refinance route where possible.

Alternatives to bridging loans for hotel auction purchases

Bridging is not the only option. Consider alternatives depending on your situation:

• Commercial mortgage: Cheaper long‑term finance but slower — usually unsuitable for immediate auction completion unless pre‑arranged.
• Development / refurbishment finance: If significant works are required and you need staged funding for conversion.
• Vendor finance: Rare at auctions but may be possible in private sales.
• Private investors or equity partners: Faster but dilutes ownership or increases cost of capital.
• Cash purchase: Eliminates funding risk but requires significant liquidity.

Pros and cons depend on speed, cost and your exit plan — speak to specialist brokers who understand hotel financing.

How UK Business Loans can help

We are an introducer that connects hotel buyers with brokers and lenders experienced in auction and hospitality finance. Complete a short enquiry (takes about two minutes) and we’ll match your case to the best partners in our network who can respond rapidly to urgent auction timelines.

What we need from you: property address, auction date, solicitor contact, deposit availability and a brief outline of your exit plan. We commonly work with deals from about £10,000 upwards.

Get a Free Eligibility Check — free, no obligation. UK Business Loans is an introducer; we do not lend money or provide regulated financial advice. We will share your details with lenders or brokers who can assist with your enquiry.

For hotel finance guidance and other hotel lending options see our industry page on hotels business loans.

Frequently asked questions

Can I use a bridging loan to purchase a hotel at auction?

Yes — bridging loans are commonly used for auction purchases because they can be arranged quickly. Suitability depends on valuation, legal pack, deposit and a clear exit plan.

Is bridging finance an option for buying a hotel at auction?

Often yes. Bridging is an option where speed is essential and the buyer can offer the hotel as security and demonstrate how the loan will be repaid or refinanced.

How much deposit will I need?

Auctions typically require a 10% deposit on exchange. You should also budget for survey, legal fees and a contingency for repairs or refurbishments.

How quickly can bridging funds be available?

Some lenders can provide conditional offers within 24–72 hours and fund within days to a few weeks if paperwork is ready. Exact timing depends on the lender and complexity of the hotel asset.

Will applying affect my credit score?

Completing an enquiry on UK Business Loans does not affect your credit score. Lenders or brokers may perform credit checks later if you proceed with an application.

Do lenders lend on leasehold hotels?

Lenders will consider leasehold properties but headlease length, restrictions, and landlord consents are important. Short leases or onerous covenants can reduce lender appetite and LTV.

What happens if the valuation is lower after exchange?

If a lender’s valuation is lower than expected this can reduce the loan amount. You’ll need to make up the shortfall with additional equity, negotiate terms, or seek a different lender. Having contingency funds is crucial.

Next steps — start your enquiry now

If you’re bidding at auction soon, don’t wait. Complete a short enquiry now and we’ll match you with finance partners who can assess your case fast: Get Quote Now.

Free, no obligation and secure. UK Business Loans is an introducer and does not lend money or offer regulated financial advice. Finance is subject to status and lender criteria.

About UK Business Loans

UK Business Loans connects UK businesses with specialist lenders and brokers across multiple sectors, including hotels and hospitality. We don’t lend — we match your enquiry to providers who can respond quickly and help secure the most suitable finance solution.