What determines regulation?
Whether a bridging loan is regulated or unregulated depends on the property's intended use, not the borrower's status. If you or a close family member will live in the property, the bridge is regulated by the FCA. If the property is for investment, business, or development with no residential intention, it's unregulated.
This distinction matters because regulated bridges come with FCA consumer protections that unregulated bridges do not.
Key differences
- Consumer protections: Regulated bridges must comply with FCA conduct rules; unregulated do not
- Cooling-off period: Regulated bridges include a reflection period; unregulated may not
- Complaint rights: You can complain to the Financial Ombudsman Service about regulated bridges
- Affordability checks: More rigorous for regulated bridges
- Speed: Unregulated bridges can often complete faster due to fewer regulatory requirements
- Flexibility: Unregulated lenders may be more flexible on loan structures and terms
💡 If you're unsure whether your bridge should be regulated, tell your broker about your plans for the property. They'll determine the correct type.
When regulation matters
If you're buying a property to live in (even temporarily), regulation provides important protections. The lender must ensure the loan is affordable, give you time to consider the offer, and follow FCA rules on fair treatment.
For investment or business property, unregulated bridging offers more flexibility and potentially faster completion, but you have fewer comebacks if something goes wrong.
Choosing the right type
In most cases, regulation is determined by your situation rather than being a choice. If you're buying your home, you'll need a regulated bridge. If you're buying an investment property, an unregulated bridge is appropriate.
Some lenders offer both regulated and unregulated products, while others specialise in one or the other. A broker will identify the correct type for your situation.
⚠️ With unregulated bridging, you don't have access to the Financial Ombudsman Service or FSCS protection. Make sure you understand the terms fully before committing.
Get specialist bridging advice
Whether regulated or unregulated, a specialist bridging broker ensures you get the right product for your needs. Get matched through Nesto for free.