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Unregulated Bridging Loans

Unregulated bridging loans are typically used when the property is not occupied or intended to be occupied by the borrower or a close family member.

They are commonly secured against:

  • Buy-to-let properties
  • Houses in multiple occupation
  • Commercial property
  • Semi-commercial property
  • Development land
  • Land without planning permission
  • Agricultural land

Most bridging lenders in the UK provide unregulated bridging finance. This means the loan itself is not regulated by the Financial Conduct Authority.

That does not mean the lender cannot lend. It simply means the loan falls outside the category of residential mortgage contracts that are subject to FCA regulation.

Whether a bridging loan is regulated or unregulated normally depends on who lives, or will live, in the property used as security.

If the borrower or a close family member lives in the property, the bridging loan is likely to be subject to regulation.

The same may apply if the borrower does not currently live in the property but intends to do so in the future.

Some lenders may also treat the loan as regulated if the borrower has previously lived in the security property, even if they no longer do. This can vary from lender to lender, so it is important to check the position before applying.

What Is a Regulated Bridging Loan?

A regulated bridging loan is a short-term loan secured against a property that is, or will be, used as a home by the borrower or a close family member.

Because the property is connected to the borrower’s own residential use, the lender must be authorised and regulated by the Financial Conduct Authority.

Regulated bridging finance is often used where a person needs short-term funding to complete a residential property transaction.

Typical examples include:

  • Buying a new home before the current home is sold
  • Completing a purchase where there has been a delay in the property chain
  • Buying a property that needs work before it can be mortgaged normally
  • Raising short-term funds against a residential property

Regulated bridging loans are usually arranged for a short period, often a few months up to 12 months. The loan is repaid when the borrower’s exit strategy is implemented, such as the sale of a property or a remortgage to a standard residential mortgage.

Regulated bridging finance is more specialist than unregulated bridging finance. There are fewer FCA-regulated bridging lenders in the market, so it is important to speak to an adviser who understands which lenders can consider your circumstances.

At Mortgage Solutions, we have access to FCA-regulated bridging loan providers and can also help with unregulated bridging finance where this is more suitable.