Are Bridging Loans Regulated by the FCA?

FCA regulation is a valued consumer protection applicable to residential financing products. This guide explains how regulations apply to bridge loans – and why it matters.

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  • help Maximum 70% LTV
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  • help We will lend against current market value of the asset with vacant possession
  • £7,500,000
    help You cannot exceed the maximum loan available based on the maximum LTV for the corresponding type of property selected above
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  • help Term should be entered in whole months, to a maximum of 12
  • help Deducted interest is where the forecast interest amount is deducted from the loan on day one.
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  • help This is the standard rate for the property type chosen
  • help You can enter a custom rate below our standard rate for the calculation, but the availability of this rate is not guaranteed
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Are Bridging Loans Regulated by the FCA?

There are two different categories of bridging loan - regulated and unregulated.

While the phrase 'unregulated' might sound a little circumspect, this is actually a catchall term used for any bespoke lending, agreed on a case-by-case basis, for financing projects that do not relate to a residential home.

If you take out a bridging loan against your home, you will need a regulated product. Regulated means that the lender must comply with the Financial Conduct Authority rules, which are around preventing mis-selling, and the provision of independent advice.

Are Unregulated Bridging Loans Safe?

Indeed, this is a bridging loan used for commercial businesses or borrowers using a bridge loan to buy an investment property.

Since each investment is unique, the nature of the lending is tailored to each applicant's circumstances.

Are There Different Types of Regulated Bridge Finance?

There are since lenders will need to look at your exit strategy's strength as their primary decision-making factor.

Some niche regulated bridging loan categories are as below:

What are the Eligibility Criteria for Regulated Bridging Loans?

The criteria are much the same for any bridging loan, and the exit strategy is the most critical factor, with lenders considering:

  • How likely you are to achieve the anticipated resale value for the property.
  • Whether you have the expertise to carry out renovation or development work.
  • If there is an agreement in principle for a remortgage exit strategy.

Other criteria include:

  • Your experience in property investments or developments.
  • What sort of property you wish to buy - unusual projects are higher risk.
  • Credit history, and whether you have had any repossessions or severe credit issues in the past.
  • How much deposit you have available. The minimum is usually 30% to 35%, but the more you can put down, the lower the rates you will achieve.
  • The security on offer is also important - and how easy it would be to sell that asset in a repossession scenario.

Is There a Maximum I Can Borrow on a Regulated Bridging Loan?

There isn't a fixed maximum, but lenders will usually have a minimum. This value could be as low as £10,000 or might be up to £50,000.

Are Residential Bridge Loans Available as Second Charges?

If you have an existing mortgage and wish to take out a bridging loan secured against the same property, you will need specialist broker advice to negotiate this.

You can secure a bridge loan as a second charge, but this isn't common, and you will need a larger deposit.

Which Sort of Bridging Loan is Suited to a Buy to Let Investment?

Should you be using short-term bridging finance to buy a rental property, you will need commercial unregulated bridging finance.

Many investors use a bridge loan, to be replaced by a buy to let mortgage from the same lender, known as a bridge to let deal.

Expert Advice with Regulated Bridging Loans

If you're looking for fast, short-term finance on a residential property, it is vital to seek advice from an independent, FCA registered broker.

Contact the business finance broker team on 0330 304 3040, or email us at info@revolutionbrokers.co.uk to explore the best rates currently available on the market.

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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