At a glance
- Regulated: secured on a home you or close family live in or will live in
- Unregulated: investment, commercial or business purposes
- Regulated loans come with FCA affordability checks and protections
- Regulated bridging is normally limited to 12 months
The short answer
A bridging loan is regulated by the Financial Conduct Authority when it is secured on land or property where at least 40% is used, or is intended to be used, as a home by the borrower or a close family member. Most other bridging loans, such as those on buy-to-lets, commercial property or development sites, are unregulated.
Side by side
| Regulated bridging | Unregulated bridging |
|---|
| Typical uses | Chain breaks, buying your next home, downsizing, buying a home for a family member | Buy-to-let, flips, auction investments, commercial property, development |
| Who regulates it | FCA mortgage rules apply | Not regulated by the FCA |
| Affordability | Lender must assess whether it is affordable for you | Lender focuses on the property and the exit |
| Term | Normally up to 12 months | Often up to 12 to 24 months |
| Complaints | Can usually go to the Financial Ombudsman Service | Ombudsman access depends on the borrower and circumstances |
| Borrower | Individuals | Individuals, limited companies, SPVs, trusts |
What regulation means for you
With a regulated bridging loan, the lender and broker have to follow FCA rules. That includes checking the loan is affordable, giving you clear information about costs before you commit, and treating you fairly if you fall into difficulty. If something goes wrong, you can usually complain to the Financial Ombudsman Service.
Regulation does not make a loan cheaper or guarantee approval. It does mean the process can involve more paperwork, and fewer lenders offer regulated bridging than unregulated.
Grey areas
Some situations need a closer look:
- Mixed-use property: a shop with a flat you live in may be regulated, depending on how much is used as a dwelling.
- Buying for a relative: if a close family member will live there, the loan is usually regulated.
- Second homes and holiday lets: treatment varies and depends on how the property is used.
- Borrowing through a company: loans to limited companies are generally unregulated. See limited company bridging loans.
Be honest with your broker about how the property will be used. Taking an unregulated loan on a property you then move into could breach the loan terms.
Frequently asked questions
What makes a bridging loan regulated?
It is regulated when it is secured on property where at least 40% is, or will be, used as a home by the borrower or a close family member.
Are unregulated bridging loans riskier?
They offer fewer consumer protections, because FCA mortgage rules do not apply. That is why they are generally limited to investment and business purposes.
Can I get a regulated bridging loan for a chain break?
Yes. Chain breaks involving your own home are one of the most common uses of regulated bridging.
Is bridging for a buy-to-let regulated?
Usually not, unless you or a close family member will live in the property.
How long can a regulated bridging loan last?
Regulated bridging loans are normally arranged for up to 12 months.
Important: Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Think carefully before securing other debts against your home.
This page is general information, not financial advice. Bridging Finance Comparison is a free to use lead generation service run by The Lead Advisory Company Limited. We are not a lender and do not give advice. We introduce enquiries to Curzon Financial, who are authorised by the Financial Conduct Authority (FCA), who may provide advice and arrange finance where appropriate. Rates, fees and criteria depend on your circumstances and the lender.