Regulated bridging loans for homeowners

Regulated bridging loans for homeowners

A bridging loan is regulated by the Financial Conduct Authority (FCA) when it is secured on a property that is, or will become, the borrower's main residence. Loans for buy-to-let, commercial property, or land with no intention to occupy are usually unregulated. Regulated status brings consumer protections: standards on affordability and suitability, transparency of terms and costs, advice and disclosure requirements, and careful assessment of the exit.

Homeowners use regulated bridging for: buying a new main residence before the existing home has sold (the chain-break case. The loan is secured on one or both properties and repaid when the sale completes); purchasing a main residence at auction where mortgage timescales cannot meet the deadline; buying or fixing an uninhabitable home. No kitchen or bathroom, structural issues, significant disrepair, then refinancing onto a residential mortgage once habitable; probate and inheritance situations where beneficiaries need short-term funding to retain a family home; divorce or separation settlements while longer-term arrangements are finalised; and land purchases for a self-build the borrower intends to occupy. Affordability on a homeowner bridge is usually assessed on the exit rather than monthly income, and interest can be rolled up or deducted so no payments fall due during the term.

One consumer point deserves stating plainly: bridging loans are not covered by the Financial Services Compensation Scheme unless the borrower intends to live in the property, so investors using unregulated bridging should satisfy themselves they are dealing with a reputable lender.