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What is an Unregulated Mortgage Bridging Loan?


Author: Myles Robinson - Advisor

Posted: Apr 27, 2022

A guide about unregulated mortgage bridging loans

Unregulated bridging mortgages occur when a first charge bridging loan is secured with a property in which the borrower of their family does not live. Also, if a bridging loan is secured by a second charge over an individual’s residential home but the loan is over £25,000, and for business purposes, it is unregulated. Besides, loans secured against any commercial properties aren’t regulated either.

Typically, unregulated bridging mortgages are for organisations that want to raise short-term funds to buy a commercial property or for a wide range of business purposes. Most people using their main residence or their family’s homes as security will be regulated and, therefore, protected by FCA.

There are many bridging loan lenders who offer unregulated bridging finance loans in the UK. They lend to refinance or purchase:

  • Land – development of land, farmland, etc.
  • Residential Houses or Flats – which are to be sold, refurbished or rented out
  • Semi-Commercial – a shop that has a flat above
  • Commercial properties
  • Leasehold extensions – as the lease approaches the expiration date, it becomes more costly to renew. A bridging loan enables one to secure a new lease quickly, after which you can mortgage or sell the property.

Most bridging lenders don’t offer regulated loans, so they will generally decline an application written on a regular basis.

Finding the best unregulated bridging loan provider

It is highly recommended that you find a qualified mortgage broker for the best deal such as The Loan Corp. Professional brokers will work out the lenders who are best suited to meet your demands. Bridging lenders are flexible, so finding the right one is essential. You are more likely to secure a bridging loan with favourable terms and conditions by consulting a mortgage broker than going solo.

Are lenders regulated?

Actually, most alternative lenders aren’t regulated by the FCA. A lot of them establish themselves to offer bridging loans for business purposes, meaning they do not need to be regulated. Often, when the business grows, they start providing more diverse product ranges. In this case, they begin considering regulation.

However, many prefer staying in their area of expertise offering solutions for business individuals only. There are lots of finance experts who choose to continue working in the non-regulated sector as it brings a broader range of options for creative and fast finance, which is an incredible prospect for the property industry.

There are a few regulated firms that try to offer similar options, but the processes involved damage the suitability of their products. For instance, bridging loans from a regulated bank such as them offered from Halifax bridging loans, takes two or three months for the procedures to be completed which is a lot of time for property developers.

What next for unregulated bridging loan mortgages?

When it comes to bridging loans, the term ‘unregulated’ should not worry you. It merely means that the properties used as security are for investment or business purposes and therefore doesn’t need the FCA’s protection as the consumer isn’t individually involved. While unregulated development loans are a necessity for people undertaking large projects, due diligence is vital. Ensure you understand the terms and conditions, and all charges involved before signing anything.

If you are looking for a bridging loan get in contact with us today to discuss your next project. We have a wide range of lenders to choose from with varying rates and offerings. If we are unable to help with your next residential or commercial bridging loan then it is highly unlikely that anyone can.

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