Bridging loans offer a flexible, short-term financing option designed to “bridge” gaps in funding—often used in time-sensitive property transactions. In the UK, bridging loans are split into two main categories: regulated and non-regulated (or unregulated).
Understanding the differences between these two types is essential for anyone considering short-term finance, whether you’re a homeowner looking to move quickly or an investor seizing a property opportunity.
What is a Regulated Bridging Loan?
A regulated bridging loan is typically used when the loan is secured against a property that is, or will soon be, the borrower’s main residence. These loans are supervised by the Financial Conduct Authority (FCA), meaning lenders must follow strict rules that safeguard consumers.
Key Features of Regulated Bridging Loans:
FCA regulated: Ensures strong consumer protection.
Used for residential property: The borrower or an immediate family member must intend to live in the property.
First or second charge options available.
Up to 12-month term: Most regulated loans have a short-term repayment schedule.
Rolled-up interest: No monthly repayments—interest is added to the loan balance and paid at the end.
Defined exit strategy required: Commonly through the sale of the property or switching to a long-term mortgage.
Regulated bridging loans are ideal for homeowners needing to break a property chain or purchase a new home before selling their current one. However, the regulated nature often means more paperwork and longer processing times, which may not suit ultra-fast transactions.
What is a Non-Regulated Bridging Loan?
A non-regulated bridging loan (also called unregulated) is not governed by the FCA, and is typically used for investment, development, or commercial purposes. Because the borrower does not intend to live in the property, the consumer protections of regulated loans don’t apply.
Common Uses for Non-Regulated Bridging Loans:
Buying or refinancing buy-to-let properties
Commercial property transactions
Property development or refurbishment
Purchasing property at auctions
Expanding a property portfolio
These loans are popular among property developers, landlords, and investors who value speed, flexibility, and bespoke arrangements. They often come with higher loan values, faster approvals, and fewer regulatory hurdles—but also carry higher risks, including less protection if something goes wrong.
Regulated vs Non-Regulated Bridging Loans: Key Differences
| Feature | Regulated Bridging Loans | Non-Regulated Bridging Loans |
|---|---|---|
| Oversight | Regulated by the FCA | Not FCA regulated |
| Purpose | For owner-occupied residential property | For investment, commercial or buy-to-let |
| Borrower Type | Homeowners | Property investors & developers |
| Speed | May involve more checks and slower approval | Faster processing, more flexibility |
| Consumer Protection | Strong protections under FCA rules | Minimal protection—borrower assumes more risk |
| Exit Strategy | Required upfront | Still expected but terms may be more flexible |
| Loan Charges | Can be first or second charge | Can be first, second, or even third charge |
Which Type of Bridging Loan is Right for You?
The choice between a regulated and non-regulated bridging loan comes down to how you intend to use the property and your individual financial situation.
If the property will be your main home, and you need temporary finance, a regulated bridging loan is likely the appropriate route. It provides consumer protection and clear regulatory oversight.
If the loan is for investment or commercial purposes, a non-regulated bridging loan may offer the speed and flexibility you need—but with greater responsibility and risk.
Final Thoughts
Bridging finance can be a powerful tool when used correctly, but selecting the right loan type is critical. Always consider the purpose of the property, your timeline, and risk tolerance.
Speaking to a bridging finance specialist or independent advisor can help you understand your options, secure the right deal, and avoid costly mistakes—whether you’re a first-time homeowner or a seasoned investor.