Regulated Bridging Loans at Bridging Finance

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If you are looking to purchase an investment property or are selling your home in preparation for purchasing a new one, you may need financial support. A mortgage will give you the financial support to purchase your property. However, applying for a loan comes with long acceptance waiting periods, a decades-long commitment to the bank, and an obscene amount of paperwork.

You may consider getting a regulated bridging loan if you want to purchase a private home.

A bridging loan could be the answer to a swift, short-term financial solution to acquire a property. Fortunately, Bridging Finance Solutions boasts extensive expertise in providing bridging loans, and we are eager to share our knowledge with you.

 

What is a Bridging Loan?

Regulated Bridging Loans with Bridging Finance Solutions

A bridging loan is a short-term loan that provides financial support during transitional periods. These loans are often used to:

  • Purchase a property while waiting for the sale of another.
  • Finance urgent renovations or develop new projects.
  • Cover temporary cash flow gaps.

 

These fast bridging loans are growing in popularity because they are quick to obtain. Unlike other property loans, you can receive your bridging loan in 72 hours, (subject to underwriting) depending on the circumstance.

 

Key Features of Bridging Loans

  • Short-Term Duration: Typically repaid within twelve months.
  • Secured Loan: Backed by property or other property assets.
  • Fast Processing: Loans are often approved within 72 hours, depending on circumstances.
  • Flexible Repayment Options: Choose lump-sum repayment, interest-only payments, or refinancing. 

 

With a standard bridging loan, you are expected to repay the loan within a year, so you don’t have to worry about years of debt repayment. 

At Bridging Finance Solutions, we are completely privately funded and can efficiently provide regulated bridging loans to those who qualify and meet our terms.

 

What is a Regulated Bridging Loan?

The Financial Conduct Authority (FCA) oversees regulated bridging loans primarily used for residential rather than commercial properties. The added consumer protection and stricter regulations make this type of loan reliable and safe. 

Regulated bridging loans are popular for individuals looking to buy a new home before selling their existing one, undertaking extensive property renovations or building a new home for personal use. 

All regulated loans require an introduction through a regulated broker. We can only discuss the application with the broker after it has been submitted. It is crucial to have a competent regulated advisor/ broker in place.

 

The Differences Between Regulated and Unregulated Bridging Loans

Regulated Bridging Loans with Bridging Finance Solutions

Though the main difference between regulated and unregulated bridging loans depends on whether or not the loan is subject to oversight by the FCA, other distinctions are often overlooked.

Take a look at the below table for a quick summary, or scroll down for further information.

Aspect Regulated Bridging Loans Unregulated Bridging Loans
Property Type Residential (Personal Use) Commercial or Investment Properties
Borrower Type Private Consumers Business or Property Investors
Consumer Protection Strict Regulatory Oversight Minimal Oversight

 

Property Type

The property used as security for the loan will influence whether a regulated or unregulated bridging loan is required.  Regulated bridging loans are secured against residential properties where the borrower or their family intend to live. 

Unregulated bridging loans exclusively secure commercial properties, buy-to-let properties, or other property investments. Their primary purpose is for business investment use, including property portfolio building, property development or resale ventures.

Borrower Type

The borrower type also has an influence on whether someone will be taking out a regulated or unregulated bridging loan. 

Regulated bridging loans are intended to help ‘bridge the gap’ for private consumers looking to move home or invest in their first property, whereas unregulated bridging loans tend to be used for investors, businesses or private landlords. 

Exit Strategy

Establishing a clear exit strategy is essential when obtaining a bridging loan, both regulated and unregulated. However, the criteria for the exit strategy tend to be stricter for a regulated bridging loan to ensure prompt repayment of the loan.  

 

The Pros and Cons of Regulated Bridging Loans

Regulated Bridging Loans with Bridging Finance Solutions

Now that you know more about regulated bridging loans, here are some of the realities of  a regulated bridging loan. 

Pro: Consumer Protection

One of the best aspects of regulated bridging loans is the protection the consumer receives. Because the FCA regulates the loans, borrowers are protected from unfair practices

There are procedures in place to protect both parties, and always involves a sense of safety for all parties involved. 

Con: Less Flexibility

When your loan is a regulated bridge, both parties must meet strict criteria. It may be  challenging for some borrowers to qualify for a bridging loan,  dependent on their credit history, but this is not always a reason for refusal. 

It is important to remember that your advisor will discuss with you affordability and exit strategy prior to proceeding.  

Pro: Lower Risk dealing with an FCA approved lender.

Due to the strict rules associated with a regulated bridging loan, strict affordability checks are under taken prior its approval, the loan won’t be approved without proof of affordability prior to issuing . 

Though this may feel unfair in some cases, it is the only way to guarantee fairness for both parties; at Bridging Finance Solutions, we pride ourselves on being able to provide quick and efficient loans, but we understand the value of taking the time to carry out these checks. 

Con: Higher Costs

Loans are subject to consumer protection and regulatory control, regulated loans may be more costly than unregulated loans. However, these additional costs are necessary to protect the consumer.  

Higher costs may be off-putting, but several contributing factors must be considered. For instance, loans that are to be repaid in a shorter period of time will naturally seem more expensive than loans with a longer repayment period.

 

Enquire About Our Regulated Bridging Loans at Bridging Finance Solutions

Bridging Finance Solutions Team

At Bridging Finance Solutions we have total control regarding all of our decisions. We assess every case individually, as we know that no two borrowers are the same. We believe in creating relationships with all of our clients and working together to make it happen. 

If you want to learn more about our process or inquire about applying for a bridging loan, contact our team to learn how we can help or fill out an application today.

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