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Regulated Bridging Loan

  • Expert Bridging Loan Advice
  • Borrow £25k – £500m
  • See if we can help you find the right deal
  • Don’t miss out on the stamp duty holiday and complete your purchase faster 


Get in touch for a free, no-obligation appointment about how we might be able to help you.

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All About Regulated Bridging Loans

What is a regulated Bridging Loan?

Regulated Bridging Loans are short term secured loans that are regulated by the Financial Conduct Authority. Bridging Loans are regulated where they are secured against a residential property that is owned or soon to be owned and occupied by the loan applicants(s) or their close family.

How is it different from an unregulated Bridging Loan?

The difference between a regulated and unregulated Bridging Loan is simply the fact that the former is regulated by the Financial Conduct Authority and the latter is not. The regulation of the loan offers more protection for residential borrowers.

Where the loan is secured on either a commercial or investment property or the loan is in the name of a business, rather than an individual, it cannot be regulated.

What are the benefits/key features of a regulated Bridging Loans?

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Short term finance

Both regulated and unregulated loans only provide finance for a maximum of twelve months.

Interest roll-up

Most lenders do not allow you the option to pay monthly interest as it accumulates and only offer a ‘roll-up’ option. When interest is rolled up, all twelve months interest payments are deferred until the end of the loan term and added to the final loan amount, meaning that you pay it off in a lump sum.

Limited exit strategies

In order to be accepted for any type of Bridging Finance, you need to have an exit strategy. This is the method you will use to pay off the loan at the end of its term. Whilst there are a number of options available for unregulated borrowers, regulated Bridging Loans only allow for refinance (through a Mortgage) or property sale. Some lenders will exclusively accept property sales, which can be limiting.

Minimum and maximum loans

Most lenders will define both minimum and maximum loan amounts that can be taken as a regulated Bridging Loan. This is ordinarily between £200,000 and £3,000,000.

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What are the features of Bridging Loan?

There are a number of costs involved in borrowing a Bridging loan, outside of the loan repayments and monthly interest charges.These are:

  • An application fee, which will vary by lender
  • An arrangement fee of around 2% (this can often be added to the loan)
  • Valuation fees
  • Legal fees
  • Stamp duty (where the property is purchased after 31 March 2021)

Is a Regulated Bridging Loan right for me?

A regulated Bridging Loan can be very helpful in a number of circumstances. For example:

  • You may be able to buy your new home before your existing property sells, which can avoid losing your dream home
  • Where you need to downsize quickly after a decline in financial circumstances
  • To build from scratch or re-develop your own residential home
  • Where the property chain has broken, prior to moving into their your new home

It is, however, an expensive option and does not come without risks. The loan is secured on your own residential home, so your property may be repossessed if you fail to pay it in full.

As the underwriter regulations on this type of loan are quite strict, it can be difficult to obtain Bridging Loans, depending on your individual circumstance. The lender will also carry out in depth searches on your financial stability and the property you intend to purchase.

It is strongly advised than anyone considering a Bridging Loan of any kind, seeks qualified financial advice prior to making a decision or application.

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What are the alternatives to regulated Bridging Loans?

The only alternative to a regulated Bridging Loan for those buying a residential home they intend to live in themselves, would be a mortgage. Mortgages are usually easier to obtain, however, the application process is months rather than days.

If you want to borrow money for commercial properties or for investment purposes, then an unregulated Bridging Loan is a good alternative. This has fewer restrictions and can be arranged equally as quickly, however it does not offer the security of Financial Conduct Authority regulation.

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How Can Sort Finance Help?

Sort Finance specialise in Bridging Finance options and can offer qualified financial advice to those considering a regulated Bridging Loan.

Regulated Bridging Finance is only offered by private banks and specialist bridging lenders, who rarely deal directly with members of the public. In order to organise a regulated Bridging Loan, you will need to apply via an authorised Mortgage Broker. Sort Finance can direct you towards those lenders with the most competitive loan option as well as those most likely to consider your individual circumstances.

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