A bridging loan allows you to use your property to secure a short-term loan. Terms generally range from one month to one year, which means unregulated and regulated bridge loans are ideal when you need to access funding quickly.
The flexibility of a bridging loan ensures you are able to use different types of property as security, including residential homes, commercial premises and with or without planning permission. However, the type of property you choose to use to secure your loan will determine whether you’re eligible for an unregulated or a regulated bridging loan.
Unregulated vs. Regulated Bridge Loans: What’s the Difference?
Regulated bridge loans are categorised in the same way as residential mortgages and are regulated by the Financial Conduct Authority (FCA). If you use a property that is occupied by the borrower or any member of their immediate family to secure your loan, you must have a regulated bridge loan.
Similarly, if you use a property that will be occupied in the future by the borrower or any member of the borrower’s immediate family to secure the loan, a regulated bridging loan is required.
However, if you use a property which the borrower or any member of their immediate family does not and will not occupy, such as an investment or commercial, you are permitted to take out an unregulated bridging loan. As more lenders offer unregulated bridging loans, you will find there are more products on the market to choose from.
If you’re considering using property to secure unregulated and regulated bridge loans, it’s important to access independent advice. To learn more, contact CS Mortgage Solutions now on 0330 332 5432.