The deciding question
A bridging loan is a regulated mortgage contract when it is secured on property in the UK and at least 40% of that property is used, or intended to be used, as a home by the borrower or a close family member. Close family generally means a spouse or civil partner, a partner you live with, parents, siblings, children, grandparents and grandchildren. The borrower must be an individual or the trustees of a trust: a loan to a limited company is not a regulated mortgage contract, even if a director's family lives in the property.
The test looks at how the property is used, not at the borrower's intentions in general. A landlord buying a flat to let is usually outside regulation. The same landlord buying a flat for their daughter to live in would usually be within it.
If the property is, or will be, lived in by you or a close family member, the loan is a regulated mortgage contract and comes with additional protections. We will tell you at the outset if that applies and how your case will be handled.
Common regulated situations
- Buying a new home before the sale of your current home completes
- Buying a home that needs work before a standard mortgage is available
- Downsizing, where the new property is bought first
- Buying a property for a close family member to live in
- Raising short-term funds against your own home
- Self-build, where the finished house will be your home
In each case, the lender assesses the loan under the Financial Conduct Authority's mortgage rules. Fewer lenders offer regulated bridging than non-regulated bridging, and their products are designed for these rules.
Common non-regulated situations
- Buying investment property to let, refurbish or sell
- Buying at auction for investment
- Refurbishment and conversion projects for sale or rental
- Development exit loans on completed schemes
- Land purchases
- Commercial and semi-commercial property
Non-regulated bridging is assessed on the property, the exit and your experience, rather than under the mortgage rules that apply to homes. Some borrowers who intend to live in a property ask whether it can be treated as an investment. It cannot. The use of the property decides how the loan is treated, and it must be described accurately.
Protections on regulated loans
Regulated mortgage contracts come with protections designed for borrowers whose home is at stake. The lender must assess affordability, which means looking at your income and outgoings and how the interest will be met, and must be satisfied that the repayment plan is credible. You receive standardised information about the loan before you commit, and you can refer complaints to the Financial Ombudsman Service.
In practice, this means regulated cases involve more documentation. Expect to provide proof of income, details of regular commitments and evidence for the sale or remortgage that will repay the loan.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Mixed and borderline cases
Some cases need careful thought. A mixed-use building with a flat that you live in above a shop, a family member moving into one unit of a block, or an investor who decides partway through to move into a property can all raise the question of regulation.
The answer depends on the facts, including how much of the property is used as a home and by whom. If you are unsure, tell us how the property is used and by whom when you first get in touch. We will tell you at the outset how your case will be handled.
Timing can matter too. Lenders look at how the property is used, or intended to be used, when the loan is taken out, so a plan to move in after a refurbishment is normally treated the same as moving in straight away. Describing your plans fully at the start avoids the case having to be restructured later.
How Instant Quotes treats it
Instant Quotes asks whether you or a close family member live in, or will live in, the property. If you answer yes, it shows only lenders on our panel with products designed for regulated bridging. If you answer no, it shows only non-regulated products.
The quotes are indicative from rates worked out from your answers. They are not offers or advice, and rates, fees and limits depend on the property, the valuation, your circumstances and each lender's own checks.
What to tell us at the start
The way a property will be used decides how a bridging loan is treated, so it is the first thing to be clear about. When you get in touch, it helps to tell us:
- Who will live in the property, if anyone, and their relationship to you
- Whether any part of the property is, or will be, let to tenants or used for business
- Who will own the property, whether you personally, jointly or through a company
- How you plan to repay the loan, and when
- Any existing mortgages on the property or on other property offered as security
Borrowing through a limited company does not on its own decide whether a loan is regulated. What matters is the use of the property and who lives there, and lenders will ask about this directly.
If circumstances change after an application has started, for example a family member decides to move in, tell us straight away. A change in use can change how the loan is treated and which lenders can consider it.
Common questions
What makes a bridging loan regulated?
It is regulated if it is secured on a property that you or a close family member live in, or will live in, with at least 40% of it used as a home.
Is a bridge for a buy-to-let purchase regulated?
Usually not, provided neither you nor a close family member will live in the property.
Are there fewer lenders for regulated bridging?
Yes. Fewer lenders offer regulated bridging than non-regulated bridging, and their products are built for the mortgage rules that apply.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
