Unregulated Bridging Loans

Key Takeaways

• Unregulated bridging loans are intended for properties not used as a main residence, such as commercial properties, buy-to-lets, or investment projects.
• These loans are not regulated by the Financial Conduct Authority (FCA), unlike residential bridging loans.
• Bridging Finance are an FCA-regulated brokerage, but still offers advice and support on both regulated and unregulated bridging loans.
• Tailored solutions are available for a variety of scenarios, with expert guidance to ensure suitability for your financial goals.

What Are Unregulated Bridging Loans?

Unregulated bridging loans are a type of short-term finance designed for properties that will not be your main residence. Examples include:

• Commercial properties
• Buy-to-let investments
• Land purchases
• Auction properties intended for resale or renovation

The term “unregulated” refers to the absence of oversight by the FCA, which governs loans for residential properties.

This lack of regulation offers greater flexibility, but it also requires careful consideration and expertise to navigate effectively.

How Does This Differ from Regulated Loans?

• Regulated bridging loans are intended for residential use and must adhere to strict FCA rules.
• Unregulated loans are more flexible but lack consumer protections like mandatory affordability checks.

At Bridging Finance, we specialise in both regulated and unregulated loans, ensuring you receive the right advice for your situation.

To explore the costs of unregulated bridging finance and whether you’ll be eligible, try our bridging finance calculator below.

Why Choose an Unregulated Bridging Loan?

Unregulated bridging loans are ideal for specific scenarios where flexibility and speed are paramount. Below are common use cases:

Property Investments

Investors often use unregulated loans to purchase properties for refurbishment, conversion, or development. Once the project is complete, the property can be sold or refinanced to repay the loan.

Auction Purchases

When buying at auction, completion deadlines are typically 28 days. Unregulated bridging loans provide the immediate funds needed to secure the deal within this timeframe.

Commercial Property Purchases

If you’re acquiring a commercial property to expand your business or as an investment, an unregulated loan can offer the necessary financial flexibility.

Land Acquisition

Unregulated loans can facilitate the purchase of land, whether for development or future investment.

How Unregulated Bridging Loans Work

Eligibility Requirements

Unlike traditional loans, unregulated bridging loans focus on your exit strategy rather than your income or credit score. Key considerations include:

• Loan-to-Value (LTV): Most lenders offer up to 70-80% LTV.
• Security: Properties or land used as collateral.
• Exit Strategy: Examples include property sales, refinancing, or business revenue.

Application Process

1. Initial Consultation: Speak with a specialist broker to discuss your goals and options.
2. Decision in Principle: Receive an outline of terms, typically within 24-48 hours.
3. Property Valuation: A professional survey determines the value of your security.
4. Formal Application: Submit required documents, assisted by your broker.
5. Approval & Funding: Once approved, funds can be released in as little as 72 hours.

Why Work With Bridging Finance?

At Bridging Finance, we pride ourselves on being an independent FCA-regulated brokerage, offering expert advice on both regulated and unregulated bridging loans. Here’s what sets us apart:

Expert Guidance

Unregulated loans can be complex and risky without proper advice. Our experienced team helps you navigate these challenges, ensuring you make informed decisions.

Tailored Solutions

Every property transaction is unique. We work with a wide range of lenders to provide bespoke solutions tailored to your needs.

No Broker Fees

Unlike many brokers, we don’t charge advisory fees.

Comprehensive Support

From application to completion, we manage all aspects of your loan process, ensuring a seamless experience.

Costs Associated with Unregulated Bridging Loans

It’s essential to understand the costs involved to determine whether an unregulated bridging loan is the right choice.

Interest Rates

Interest rates typically range from 0.65% to 1.5% per month, depending on your LTV and the nature of the property.

Facility Fees

Lenders often charge a facility fee of 1-2% of the loan amount.

Valuation Fees

A professional property valuation is required, with fees averaging around £900-1200, depending on the property’s value and location.

Legal Fees

Both your solicitor’s and the lender’s legal fees must be covered. Typical costs range from £1,000-2,000.

Exit Fees

Some lenders charge an exit fee, though at Bridging Finance, we strive to recommend lenders who do not impose these additional costs.

Risks and Considerations

While unregulated bridging loans offer unparalleled flexibility, they come with inherent risks:

• Higher Costs: Interest rates and fees can add up quickly.
• Lack of Regulation: Without FCA oversight, borrower protections are limited.
• Repossessions: Failure to meet repayment terms could result in the loss of your property.

To mitigate these risks, always work with an experienced broker who understands the market and your specific needs.

Example Scenarios

Renovation and Resale

An investor purchases a rundown property for refurbishment. With an unregulated bridging loan, they secure the funds needed to buy and renovate the property. Once the renovation is complete, they sell it at a profit, repaying the loan in full.

Buy-to-Let Portfolio Growth

An investor uses a bridging loan to acquire multiple buy-to-let properties, refinancing them onto longer-term mortgages after refurbishment.

FAQs About Unregulated Bridging Loans

Are unregulated bridging loans safe?

Yes, provided you have a sound exit strategy and work with a reputable broker unregulated bridging loans are generally safe – however, there are less consumer protections in place compared to regulated loans.

How quickly can I secure funds?

Funds can be arranged within 3-6 weeks, or as little as 72 hours in urgent cases.

What happens if I can’t repay the loan?

If repayment isn’t possible, the lender may repossess your property to recover their funds. This underscores the importance of a robust exit strategy.

Unregulated bridging loans are a valuable tool for property investors, developers, and businesses requiring fast, flexible funding. At Bridging Finance, we’re here to guide you through the process, ensuring your loan is tailored to your needs and executed with precision. Contact us today to explore your options and make your next property transaction a success.