Short answer: At auction the winning bidder usually signs an unconditional contract and pays the deposit on the day, with no cooling-off and no finance clause. Arrange the money first. With a property-secured loan against property you already own, funds can be ready in as little as 24 hours with no financials. Bid only within what is funded.
Why auctions are different from every other purchase
Most property purchases give you time. You make an offer subject to finance, subject to inspections, perhaps with a cooling-off period. An auction gives you none of that. The government guidance in the big three states says the same thing in plain words.
- Deposit on the day. NSW Government guidance says the highest bidder must sign the contract and pay the deposit on the spot (NSW Government).
- No cooling-off. NSW, Queensland and Victoria all state that no cooling-off period applies to a purchase at auction.
- Unconditional bidding. Queensland says the terms of sale usually require you to bid on an unconditional basis. You cannot make a bid “subject to finance” or subject to selling another property (Queensland Government). Consumer Affairs Victoria says finance is an example of a condition you cannot add unless the seller agrees (Consumer Affairs Victoria).
The hammer falling is the moment your finance has to already exist. If you are a business owner buying a shed, a warehouse or a shopfront, the same logic applies, and the timeline is tighter than most buyers expect.
Typical deposit and settlement, by state
These are the figures state government sources give as typical. The contract on display before the auction is what binds you, so read it, and have a conveyancer or lawyer check it before you bid.
| State | Deposit | Settlement | Cooling-off |
|---|---|---|---|
| NSW | Usually 10 per cent, paid on the spot | Set by the contract; commonly around six weeks | None at auction |
| Victoria | No law on the amount; usually 10 per cent, held in a trust account | Usually 30 to 90 days, set by the seller in the contract | None after a winning bid |
| Queensland | Ask the agent for the percentage of the winning bid; cheque or deposit bond usually accepted | Usually four to six weeks; almost all within 30 to 90 days | None at auction |
Three notes. First, Victoria’s guidance says you can ask the seller before the auction whether they will accept a part deposit, but you cannot ask for a longer settlement period after bidding unless the seller agrees (Consumer Affairs Victoria). Second, a shorter settlement shortens the time you have to arrange your bank loan. Third, these are residential-style norms; commercial contracts are often negotiated differently, so check yours.
What happens if you cannot settle
This is the part nobody wants to read, and the part worth reading twice.
- NSW: if you cannot complete, you will lose your deposit and may be liable for any damages suffered by the vendor.
- Queensland: there are very serious legal consequences. You may be required to pay the amount of your winning bid, even if you did not have the money. You may also be liable for the cost of re-auctioning the property and any shortfall between your offer and the winning bid at the next auction.
- Victoria: once both parties sign and the deposit is paid, the sale is binding and enforceable.
The detail depends on the contract and on what the vendor chooses to do, which is why legal advice matters if you are in trouble. If you have already won and the money has not come together, the quickest route is an honest conversation with your lawyer and a funding plan that is real. Our guide on finance falling through before settlement covers the options for that exact situation.
Pre-approval is not the same as funds ready
A bank pre-approval is a useful starting point. It is also usually conditional on a valuation of the property you are buying and on the lender’s final checks. At an auction there is no condition to hide behind. NSW guidance says to confirm your borrowing limit with your lender before bidding, including stamp duty, and to have the necessary approvals in place.
Think of it as two different states of readiness.
- Pre-approved: a lender says it is likely to lend up to a figure, subject to conditions. Useful for setting a budget. Not cash.
- Funds-ready: the deposit is available now, and you can show how the balance will arrive by settlement.
If you own property, you can use it to reach funds-ready quickly. A property-secured business loan is assessed on the equity in a property you already own and on the exit, not on financials or tax returns, and funds can be ready in as little as 24 hours. Equity is value minus existing loans, and lenders lend against a portion of it. The exit is as important as the equity: for an auction purchase it is usually the bank loan that refinances you at or after settlement, or the sale of an asset.
For urgent timing, see our pages on urgent bridging loans and second mortgages funded in 24 hours.
An auction timeline: what has to be ready, and when
| When | What must be ready |
|---|---|
| Before the auction (weeks out) | Contract and searches read by your lawyer. Building and pest checks done. A hard ceiling worked out, including stamp duty and costs. Bank finance applied for. Equity funding discussed with a lender. |
| Day before | Deposit funds available in an account or arranged in the form the agent accepts. ID and registration to bid. Authority for anyone signing on your behalf. |
| Auction day | Your written maximum, and the discipline to stop at it. Cheque, deposit bond or transfer ready for the deposit. Lawyer on call. |
| Contract to settlement | Bank valuation, loan documents and insurance sorted. Refinance of any bridge arranged. Funds for the balance, stamp duty and adjustments confirmed. |
| Settlement day | Balance paid. Bridge or second mortgage discharged out of the bank advance, if that was the plan. |
The week before is where plans fail. Money that needs a valuation, a sign-off and a signatory in another state is not funds-ready on Saturday morning. Start the equity conversation at least a few days ahead, even if the numbers are not final.
Bridging or a second mortgage, and commercial purchases
A property-secured short loan can cover two things at an auction purchase: the deposit on the day, and a shortfall at settlement while the bank loan finalises.
- Deposit funding. Release a deposit from equity in property you own, then repay it when the bank advance lands or another asset is sold.
- Shortfall at settlement. The bank lends less than the contract price after a lower valuation, or an approval is delayed. A second mortgage or bridging loan covers the gap.
- Victoria. A caveat loan is available in Victoria only. Everywhere else the loan settles onto a registered second mortgage.
This is a bridge, not a plan. It needs a stated exit, and it costs more than a bank loan, so the shorter the bridge, the better. Our funding is $20,000 to $5M, assessed on equity and the exit.
Commercial and industrial property
Business owners buying a warehouse, factory unit or shopfront at auction face the same unconditional bid, with a few extra considerations. Do not assume the consumer protections written for home buyers apply, and check the contract for the deposit, settlement date, GST treatment and anything unusual. Ask your lawyer to confirm.
- Commercial valuations usually take longer than residential ones, and a bank may value specialised or industrial property conservatively.
- A tenanted purchase means leases and rent to understand. A vacant one means you carry the holding costs.
- If the purchase is for your own operation, the bank may look at the business’s financials. A property-secured loan against other property is assessed on equity and the exit, which is why owners with messy books or ATO debt often use it for the deposit.
For the commercial side see commercial bridging loans and commercial property finance.
Never bid beyond what you have already funded
The simplest rule in auction buying is also the one most often broken. Set a maximum in writing before the day, work it back from what is actually funded, and stop when the bidding passes it. Adrenaline, a rival bidder and a crowd do not change what the bank will lend.
- Your maximum includes stamp duty, legal costs and the bridge costs, not only the hammer price.
- If your plan only works when the bank values the property at the price you pay, you do not have a plan. Valuations come in low, and the shortfall is yours.
- If settlement relies on the sale of another property that has not sold, you are betting your deposit on timing.
- If a bridge is the only thing between you and default, the exit has to be real, not hopeful.
If you lose the auction, you lose nothing. If you win and cannot pay, you can lose the deposit and face a claim for the vendor’s losses. That asymmetry is the whole case for bidding only what you have funded.
Get funds-ready before the auction catalogue lands
If you own property and an auction is on your calendar, find out what your equity could release before you register to bid. The 60-second eligibility check makes no credit enquiry and costs nothing. See what you could have ready by auction day, or call 1300 863 711 and tell us the date.
Frequently asked questions
Is there a cooling-off period if I buy at auction?
No. NSW, Queensland and Victorian government guidance all say there is no cooling-off period when you buy at auction. The contract is binding when the hammer falls, so your finance has to be organised before you bid.
How much deposit do I pay at auction?
It is set by the contract, so check the terms on display before the auction. NSW and Victorian government guidance say it is usually 10 per cent of the price. Queensland advises asking the agent for the deposit as a percentage of the winning bid.
Can I make my bid subject to finance?
Generally not. Victorian and Queensland guidance say bidding is on an unconditional basis, and finance cannot be added as a condition unless the seller agrees. That is why finance should be arranged before auction day.
What if I win but cannot settle?
You risk losing the deposit and being liable for the vendor’s losses. NSW guidance warns of damages, and Queensland guidance mentions the winning bid, re-auction costs and any shortfall. Speak to a conveyancer or lawyer immediately.
Can a business owner use a second mortgage to fund an auction purchase?
Yes. A second mortgage or bridging loan on property you already own can fund a deposit or shortfall while bank finance is arranged. It is assessed on equity and the exit, and it needs a credible plan to repay.
Does it cost anything to apply?
No. There's no cost to apply or check your eligibility. All costs are set out in writing in your loan offer before you sign anything.
Will checking my eligibility affect my credit score?
No. Our 60-second eligibility check doesn't make a credit enquiry. A credit check is only done later, with your consent, if you decide to proceed.
