Regulated Bridging Loans | Everything You Need to Know

• Regulated bridging loans are designed for residential properties that you will live in (or your family).
• They are ideal for buying before you sell, helping to break property chains and securing your next home.
• Commercial and buy-to-let properties are not covered by regulated bridging loans.

What is a Regulated Bridging Loan?

A regulated bridging loan is a type of short-term finance secured against residential property. These loans are regulated by the Financial Conduct Authority (FCA) to protect consumers, ensuring transparency and fairness. Unlike unregulated loans, which are used for commercial or investment purposes, regulated bridging loans are for properties you intend to live in.

Key Features of Regulated Bridging Loans

• Purpose: To help with purchasing residential properties before selling your current one.
• Speed: Funds can be available within days to weeks, depending on the application.
• Short-term: Typically lasts up to 12 months.
• Repayment Flexibility: Paid off via an exit strategy, such as selling your existing property or obtaining a long-term mortgage.
• Regulation: Overseen by the FCA to ensure consumer protection.

How Does a Regulated Bridging Loan Work?

1. Assessment of Your Needs Begin by identifying your financial needs and discussing them with a broker. At Bridging Finance, we specialise in tailoring solutions that match your circumstances.
2. Loan Application Process
   • Use a bridging loan calculator to estimate costs.
   • Get a free quote and discuss terms with your broker.
   • Secure a decision in principle within 24-48 hours.
3. Property Valuation Lenders will conduct a property valuation to determine the loan-to-value (LTV) ratio. The LTV typically needs to be 80% or less.
4. Approval and Funds Release Once approved, funds can be released within 72 hours. This allows you to proceed with your property purchase.
5. Loan Repayment Repay your loan once your exit strategy, such as selling your existing property, is complete. Interest stops accruing on the day you repay.

Regulated Bridging Loan Calculator

Why Choose Bridging Finance for Your Regulated Bridging Loan?

• Expert Guidance: Our brokers handle the entire process, from initial consultation to loan approval.
• Fee-Free Service: We don’t charge advice fees, making our service cost-effective.
• Tailored Solutions: Access to a wide range of lenders and products to suit your unique needs.
• Transparency: We work with lenders who avoid hidden fees, ensuring clarity in costs.

Costs Associated with Regulated Bridging Loans

Understanding the costs is crucial for planning. Here’s a breakdown:

• Interest Rates: Typically 0.68%-1% per month. Interest is often rolled up into the loan, so no monthly payments are required during the term.
• Facility Fee: Charged by the lender, usually 1.5%-2% of the loan amount.
• Valuation Fees: Vary depending on property value; desk-based valuations may be free for properties under £1m.
• Legal Fees: Cover both your solicitor’s fees and the lender’s, averaging £1,000 for properties worth £250k.
• Redemption Fees: A small administrative fee for closing the loan, typically £100-£150.

At Bridging Finance, we strive to minimise these costs by negotiating favourable terms and avoiding lenders who charge excessive fees.

When to Use a Regulated Bridging Loan

Buying Before Selling

Secure your dream home without waiting for your current property sale to complete. Bridging loans allow you to buy now and repay once your home sells.

Urgent Property Purchases

If you need to act fast, such as in auction scenarios, bridging loans provide the speed you need to complete within tight deadlines.

Refinancing Needs

For interest-only mortgages reaching term-end without repayment vehicles, bridging loans offer breathing space to explore long-term solutions.

Eligibility for Regulated Bridging Loans

Eligibility depends on:

• Loan-to-Value (LTV): Max LTV is usually 80%.
• Exit Strategy: A clear plan for repaying the loan.
• Property Type: Must be residential.

Your income and credit score are less critical as repayment comes from the exit strategy, not monthly instalments.

Frequently Asked Questions

Is a Regulated Bridging Loan Right for Me?

If you need short-term funding for a residential property, a regulated bridging loan is likely the best option. Use our free calculator to estimate costs and weigh the benefits.

How Quickly Can I Get a Bridging Loan?

Funds can be arranged in as little as 72 hours, though the average timeframe is 3-6 weeks.

What Happens if I Can’t Repay?

Your property could be repossessed to recover the lender’s funds. This is why having a sound exit strategy is vital.

Are There Any Hidden Costs?

At Bridging Finance, we work with transparent lenders to avoid surprises. Most costs, such as interest and facility fees, are outlined upfront.

Regulated bridging loans provide a powerful solution for residential property purchases, offering speed, flexibility, and peace of mind. With expert guidance from Bridging Finance, you can navigate the process with confidence. Contact us today for tailored advice and support.