Regulated Bridging Loans
Regulated bridging loans fall under Financial Conduct Authority (FCA) oversight when secured against a borrower’s primary residence. Understanding how regulation applies is essential before considering short-term property finance.
What Are Regulated Bridging Loans?
Regulated bridging loans are short-term secured facilities that are subject to regulation by the Financial Conduct Authority (FCA).
Regulation typically applies where the property being secured is, or will be, occupied by the borrower or their immediate family as a primary residence.
In these cases, lenders must comply with strict affordability, disclosure and consumer protection requirements.
5 Critical Rules That May Limit Borrowers
1. Affordability Assessment
Lenders must conduct detailed affordability assessments, including income verification and stress testing.
2. Primary Residence Test
If the borrower or close family occupies the property, the loan may fall within regulated mortgage rules.
3. Enhanced Disclosure Requirements
Regulated products require formal documentation, cooling-off periods and additional compliance procedures.
4. Stricter Underwriting Standards
Income changes, complex portfolios or adverse credit may result in declines under regulated criteria.
5. Policy Changes by Private Banks
Some private banks and mortgage providers have tightened affordability models, leaving borrowers unable to refinance onto new regulated products.
Why Some Borrowers No Longer Qualify
In recent years, affordability models have become more conservative. Even borrowers with substantial equity may find they no longer meet regulated mortgage criteria.
This can occur due to:
- Changes in income structure
- Simply getting closer to retirement age
- Interest rate stress testing re affordability
- Adverse credit history
In certain situations, borrowers may face the prospect of selling a property if refinancing options are limited.
When Regulation May No Longer Apply
Important Considerations
Each case must be assessed individually. Regulatory status depends on occupancy, borrower circumstances and the intended use of the property.
Borrowers should always seek appropriate legal and financial advice when reviewing regulated mortgage options.
Unsure Whether Your Loan Is Regulated?
If your circumstances have changed and you are unsure how regulation applies, we can review your position confidentially.