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Protections | What Is the Difference: Regulated Bridging Loans v. Unregulated Bridging Loans

Updated: Aug 8, 2023

What Difference Does IT Make?

As you will have seen from the first article in this series, a regulated bridging loan is a type of bridging loan that is regulated by the Financial Conduct Authority. By implication, an unregulated bridging loan is therefore not regulated by the Financial Conduct Authority.

To summarise:

A regulated bridging loan is borrowing that:

If you are looking to raise a first or second charge against a property that is the residence of the owner, then you will need a regulated bridging loan. A minimum of 40% of the property will need to be (either now or in the near future) lived in by the homeowner or their family.

An unregulated bridging loan is borrowing that:

If you are looking to purchase or reloan a secondary property, commercial asset or a buy-to-let investment, then you can use an unregulated bridging loan. These short-term loans can be for expanding property portfolios or investing in long-term capital gains.

So What Difference Does It Make:


The Financial Conduct Authority (FCA) regulates the financial services sector including lenders that offer bridging loans. The purpose of the FCA is to protect consumers from incorrect advice and misleading behaviour from lenders and brokers as well as promoting fair competition.

To obtain regulated bridging loans you will follow similar underwriting rules as a residential mortgage. Regulated bridging loans must meet certain set standards and ensure consumers are protected under the Mortgage Code of Business (MCOB) rules. A regulated lender will also want to know about your personal financial situation in order to assess your method of repayment and affordability.


However, an unregulated loan is not subject to the scrutiny of the Financial Conduct Authority and so you should proceed more carefully and by implication, the bridging loan is riskier than a regulated loan.

Unregulated bridging loans do not have any strict criteria. Some may argue therefore that it is more flexible. Most unregulated bridging loans will be commercial and bespoke to an individual’s or company’s circumstances, utilising assets or company income as an exit. As a result, lenders are unlikely to look at your personal income during the application process.

Generally speaking, because unregulated bridging loans do not have to fit strict criteria, there is less paperwork involved and more lenders offer them. It is often the case that unregulated bridging loans also tend to be processed quicker than regulated loans.

The Good News

If you need a regulated bridging loan, Penn Financial, authorised and regulated by the Financial Conduct Authority, can help. If you require an unregulated bridging loan then Penn Services (not regulated by the Financial Conduct Authority) can help you.

Whether you seek a regulated loan or an unregulated loan, Penn Group of Companies can help you achieve your goals all under the Group umbrella.

Always remember that when it comes to repayment, using your home as security for a bridging loan will put your home at risk and it may be repossessed if you are unable to keep up with payments on that loan.

Please contact us

0333 34 44 34 8

The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.


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