Head of Content
Head of Bridging and Commercial
Bridging loans can be split into two categories: unregulated and regulated. Here you will learn about the latter, how to get one and how we can help.
Are bridging loans regulated by the FCA?
Most bridging loans are not regulated by the Financial Conduct Authority (FCA) as they are more commonly used by property investors, landlords and for business purposes. This means that, like most investment mortgages, bridging finance is usually unregulated.
There are, of course, exceptions as regulated bridging loans do exist. These are regulated by the FCA, which means the borrower has protection against things like mis-selling, to exactly the same degree as if they were applying for a residential mortgage.
What makes regulated bridging different?
Aside from having FCA protection, regulated bridging loans are used when the agreement involves residential property, while unregulated is for commercial and investment purposes.
If you need the finance to buy or renovate a property you or your familiy are planning to live in, or the debt will be secured against your primary residence, you will need a regulated bridging loan.
Common scenarios where regulated bridging can be helpful include:
- Renovating an ‘unmortgageable’ property to live in it
- Buying a home you plan to live in at an auction
- Chain breaks
- To renovate a property you currently live in
Unregulated bridging, meanwhile, is largely used to expand buy-to-let portfolios, flip properties and invest in the commercial and residential property markets.
Eligibility criteria
The eligibility criteria for a regulated bridging loan is largely the same as for an unregulated one, but the requirements can be more stringent due to FCA regulations.
The main requirements are as follows:
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For residential purposes: In most cases, you will only get approved for a regulated bridging loan if at least 40% of the property’s floor space will be residential.
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Exit strategy: You won’t get a bridging loan, either regulated or unregulated without an exit strategy. For a regulated bridging loan, the exit would either be a remortgage onto a standard residential agreement or the sale of the property.
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Deposit requirements: They can be more stringent for regulated bridging and usually start at around 30% of the property’s value (70% loan-to-value).
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Credit history: It is possible to get a regulated bridging loan with various types of bad credit, but lenders can be more flexible here if the deal is unregulated. With a strong exit strategy, the provider can assess your application on a bespoke basis.
How to get a regulated bridging loan
Follow the steps below to take the first steps towards a bridging loan application:
Prepare your exit strategy: Your lender will scrutinise your exit strategy so it’s important to have clear evidence of it. This may include an agreement in principle if your plan is to remortgage or an offer on the table if you are selling the property.
Gather the rest of your paperwork: Having the other documents you will need can save you time in the long run. This includes photo ID, proof of address and three months’ bank statements and pay slips to evidence your income.
Speak to a bridging loan broker: Regulated bridging finance can be more difficult to come by as there are fewer lenders available, but a bridging loan broker can tip the odds in your favour. Our advisors have the knowledge, experience and contacts to help you get the best outcome, and you can get started with one of them below.
Speak to a bridging finance expert today
Available lenders and rates
here are fewer lenders available for regulated bridging finance as many bridging providers cannot operate in a regulated environment. There are some options, though, including:
Several high street lenders also offer bridging loans on a regulated basis. They include:
- NatWest
- HSBC
- Santander
- Barclays
There are also broker-only lenders and exclusive deals available through our advisors, who can compare every regulated bridging deal on the market to help you find the best option.
Favourable rates can sometimes be more difficult to come by with regulated bridging loans, partly because there are fewer lenders available, but also because those lenders have less flexibility to offer bespoke deals because they are bound by the FCA’s guidelines.
The best way to find a competitive rate is through a specialist bridging finance broker.
Why choose Teito for your bridging finance needs?
We have brokers on our team who specialise in regulated bridging finance, and their knowledge, expertise and lender contacts could help you secure a better deal.
Here are just some of the reasons our customers turn to us for bridging loan advice:
- Your first consultation with a bridging expert is free
- Our brokers can source exclusive rates and deals
- We are 5-star rated on leading review websites
- We will oversee your application from start to finish
Ready to take advantage of a free, no-obligation chat with a broker who specialises in regulated bridging finance and can offer bespoke advice on it? Get started here.
FAQs
The main advantage is protection from the FCA, which provides a safety net in the event of you receiving poor advice or a lender mis-selling a bridging finance product to you.
They are not quite as quick to arrange as unregulated bridging loans as the checks can be more stringent, but are still much quicker to arrange than mortgages.
Read more about the general pros and cons of bridging in our standalone guide.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.