The auction catch: no finance clause
When you buy at auction, you sign an unconditional contract on the day. There is no cooling-off period and no subject-to-finance clause. You pay the deposit on the spot and commit to settle on the date in the contract, commonly 30 to 60 days away. If you can't settle, you may lose the deposit and face further claims from the vendor.
Most buyers go to auction with some form of pre-approval, but pre-approval isn't a guarantee. Banks still need to assess the specific property, order their own valuation, and sometimes reassess the borrower. It is common for a bank to come back late, approve less than expected, or ask for more information when the settlement date is already close. Commercial and industrial property at auction is even harder, as bank commercial credit processes can take up to three months or more.
Where Equity Tap fits
Equity Tap is a direct, independent private business lender. We lend our own money from $50k to $5m for one to twelve months, secured by a first mortgage, second mortgage or caveat over residential or commercial property anywhere in Australia. Our loans are for business purposes, so we help where the auction purchase is for the business: business premises, an industrial unit, a commercial investment held by the business, or a site for the business's own use.
We don't order a valuation before approval, which is often the step that holds up auction settlements. For a property-secured loan we don't need tax returns, BAS, profit and loss, an accountant's letter or bank statements.
Three common auction scenarios
| Scenario | What we fund | Usual exit |
|---|---|---|
| Bank approval not ready by settlement | Full settlement, secured by the purchased property and possibly another property | Bank refinance when its approval completes |
| Bank approved less than the price | The shortfall, often on a second mortgage over another property | Sale of another asset, refinance or cash flow |
| Deposit was paid from working capital | Replenish the business's cash while settlement is arranged | Refinance at or after settlement |
Timeline from the hammer to the keys
- Auction day or soon after: call 1300 123 024 with the contract, the settlement date, the property you're buying and any other property you can offer.
- Same call: conditional approval can often be given on the phone and a term sheet issued in about 30 minutes once we have the scenario.
- Next days: loan documents, ID and property details. No valuer visit to wait on.
- Settlement: eligible loans can settle in as little as 24 hours once documents are complete, so the contract date can be met even if you call late.
- After settlement: the bank completes its process at its own pace and refinances us out, or another agreed exit repays the loan.
If settlement day is days away and the bank still hasn't confirmed, call now. Our urgent property settlement loans page explains how we handle very tight timeframes.
Breathing room while you refinance
Interest for up to the first six months can be prepaid or added to the loan, so there are no scheduled payments while the long-term finance is arranged. Interest is not waived. The aim is simple: settle on time, then move to the long-term lender as soon as it is ready. Because the term runs from one to twelve months, you only carry the loan for as long as the refinance takes, not a day longer.
For example
For example, an engineering business buys a small industrial unit at auction to replace its leased premises. The bank's commercial team says it can't settle in the 45 days on the contract. A short-term first mortgage over the new unit, with a second mortgage over the director's home as additional security, settles on the contract date. The bank refinances a couple of months later.
What we need
- The signed auction contract and the settlement date.
- ID for each borrower and guarantor.
- Details of any other property offered as security and its existing mortgage.
- Evidence of the exit, such as a bank approval in progress or another asset to be sold.
No credit check at initial assessment. Past credit issues or a decline elsewhere are not automatically a problem.
Related scenarios
Buying by private treaty instead? See commercial property purchase funding. Buying land to develop? See development site purchase. For the broader picture on short-term property-backed funding, read business bridging loans.
Brokers
When a client's auction settlement is at risk, every day counts. Send it through our broker page for a fast indicative answer, and keep the refinance once the bank catches up.
Settle on the day
Each loan is priced on the client's individual circumstances, aiming for the sharpest rate available for that situation, with the full cost shown before you proceed. Apply online or call 1300 123 024.
Business-purpose lending only. Approval, timing and terms depend on the scenario.
Frequently asked questions
Are auction contracts unconditional?
My bank won't be ready by settlement. Can you help?
How fast can you settle an auction purchase?
Do you need a valuation of the property I bought?
Can you lend on a home bought at auction to live in?
What if the bank approved less than I need?
How long can I keep the loan?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.