Regulated vs Unregulated Bridging Loans: Which One Do You Need?

If you’ve been researching bridging loans, you’ve probably noticed lenders talking about regulated and unregulated options.

The names make it sound like one’s safe and proper, whilst the other’s a bit Wild West. Here’s the thing: that’s not what these terms mean at all.

The terminology creates unnecessary worry.

You might think “unregulated” means risky or unprotected, but it doesn’t. Getting confused about which type you need could waste your time, have you applying for the wrong loan, or missing out on the flexibility that actually suits your situation better.

Understanding the difference is simpler than you think.

It’s about what you’re buying and who’s borrowing, not about safety or quality. Once you know which type fits your situation, you can move forward confidently with the right finance structure.

Let’s clear up the confusion and work out which one you actually need.

What Makes a Loan Regulated or Unregulated

A regulated bridging loan is one secured against a property where you or your immediate family actually live (or will live).

If at least 40% of the property is your home, or will be soon, it’s regulated. The Financial Conduct Authority oversees these loans to protect consumers who are borrowing against their homes.

Everything else? That’s unregulated.

Your buy-to-let purchase, your commercial property, your development project. All unregulated.

When you’re borrowing for investment or business purposes, you don’t get the same consumer protection. That’s because you’re treated as a professional borrower who understands what you’re doing.

The 40% rule is strict. It’s not negotiable or flexible. If you or a close family member occupy 40% or more of the property securing the loan, it’s regulated. If it’s 39%, it’s unregulated.

Importantly, you can’t just pick which type of loan you fancy. Your situation determines it automatically.

If you’re borrowing as a company rather than an individual, it’s automatically unregulated regardless of what the property is used for. The loan type is dictated by your circumstances, not your preference.

Related: What Are Bridging Loans Used For?

Why “Unregulated” Doesn’t Mean Risky

The word “unregulated” makes it sound like anything goes, but that’s not the picture.

These loans are designed for people who understand property investment and business borrowing. You don’t need the same hand-holding as someone buying their first home.

Think about it this way: if you’re a professional landlord with five buy-to-let properties, you understand how property finance works. You know about loan-to-value ratios, exit strategies, and interest calculations.

You don’t need the FCA checking whether the lender has explained everything properly because you’re already familiar with how these loans work.

Industry bodies like the Association of Short Term Lenders and the National Association of Commercial Finance Brokers still set standards. Legitimate lenders follow proper professional practices, maintain appropriate capital reserves, and operate within industry guidelines. Just because the FCA isn’t involved doesn’t mean there’s no oversight.

Most property investors and developers in the UK use unregulated loans. It’s the mainstream choice for professional borrowers.

When you work with an established broker who has relationships with hundreds of lenders, you get another layer of credibility checking. We’ve built our network over 20 years, and we only work with lenders who have solid reputations and track records.

Which Type Do You Actually Need?

Right, so if unregulated isn’t risky, which type do you actually need? Let’s work through the main scenarios.

For Buy-to-Let and Property Investment

If you’re buying a buy-to-let property, you’ll usually need unregulated bridging finance. This applies when you’re using investment properties as security or borrowing through a company.

Same goes for auction purchases where you’re planning to refurbish and sell. That’s an investment project, so it’s unregulated.

Bridge-to-let deals where you’ll refinance onto a BTL mortgage later? Also unregulated. The property you’re buying isn’t going to be your home.

When you’re expanding your portfolio, all those transactions fall under unregulated lending. You might own three buy-to-let properties already and want to buy a fourth. You’ll use one of your existing properties as security. That’s unregulated because none of these properties are your residence.

For Business and Commercial Property

Buying commercial property or business premises?

That’s unregulated. A shop, an office, a warehouse. These are business assets, so you’re in unregulated territory from the start.

If your company is the borrower, it’s automatically unregulated regardless of property type. Company borrowing falls outside FCA consumer protection because companies aren’t consumers. This applies even if you’re a sole director of your own limited company.

Mixed-use properties can get slightly more complicated.

If you’ve got a shop with a flat above and you’re not living in the residential part, it’s unregulated. But if you’re living in that flat and it makes up more than 40% of the property, you’re looking at a regulated loan. Most commercial or semi-commercial properties end up being unregulated in practice.

The same applies if you’re releasing equity from business property to fund working capital. You’re using a business asset for business purposes. That’s unregulated.

Development projects, whether you’re building from scratch or converting existing buildings, also fall under unregulated lending.

Related: Can You Get a Bridging Loan Without Owning a House

The Real Differences That Matter to You

Beyond the regulatory status, here’s how these loan types actually differ in practice.

Speed and Flexibility

Unregulated loans move faster because there aren’t layers of consumer protection checks to work through.

You’re looking at completion in one to two weeks rather than three to four. When you’re competing for a property at auction with a 28-day completion deadline, that speed matters.

You also get more flexibility.

Unregulated loans can last up to 24 months, sometimes longer, whereas regulated loans stop at 12 months.

You’ve got options on how you pay the interest too. You can pay monthly if you want to keep the loan balance down, or you can roll it all up and pay it at the end. With regulated loans, you’re usually stuck with a rolled-up interest option only.

Higher loan amounts are possible with unregulated finance.

There’s no cap, we arrange loans from £250,000 upwards, and some of our clients borrow several million. Regulated loans tend to be smaller because they’re tied to personal residential situations rather than commercial property values.

What About Costs?

There’s a myth that unregulated loans cost more, but your rate depends on your specific deal. The loan-to-value, property type, your experience, and exit strategy all affect what you’ll pay.

A straightforward buy-to-let purchase with a 65% loan-to-value and a clear refinance exit will get better pricing than a complicated development project with higher leverage.

Yes, there are arrangement fees. You’re looking at around 2% for most deals.

But when you factor in the speed and flexibility you’re getting, plus access to specialist lenders through a broker, the overall value often stacks up better than slower, more restrictive alternatives.

Working with a broker gives you access to lenders you can’t reach directly.

We’ve built relationships with over 250 lenders, including mainstream banks, private banks, specialist lenders, and high-net-worth individuals who lend their own funds. That breadth of contacts means we can find competitive rates for your specific situation, not just what’s advertised publicly.

When You Need Specialist Help

Most straightforward scenarios are simple enough. You’re buying a buy-to-let, you know it’s unregulated, you move forward.

But some situations benefit from specialist expertise.

If you’re dealing with multiple properties as security, that adds complexity. Maybe you want to borrow against two properties to fund a third purchase.

Or you’re refinancing several properties at once as part of a portfolio restructuring. These scenarios need someone who knows which lenders will consider multiple securities and how to structure the deal properly.

International transactions are another area where expertise makes a difference. We’ve arranged cross-border deals for UK investors buying overseas and international clients acquiring UK property.

If you’re a UK resident buying a property in Spain or Portugal, you need finance that bridges two jurisdictions. If you’re based abroad and buying UK property, you need lenders who’ll consider non-resident borrowers. You don’t want to be guessing your way through these situations.

Company versus personal borrowing is worth getting right. Should you borrow as an individual or set up a limited company? You’ve got tax considerations, asset protection angles, and future flexibility to think about.

We can’t give you tax advice (you need an accountant for that), but we can explain how your borrowing structure affects your finance options and what different lenders will accept.

For loans above £250,000, especially when you’re getting into the millions, you’re dealing with private banks and specialist lenders who don’t advertise publicly. They work through established brokers who’ve built relationships over years.

That’s where our network of 250+ lenders, including private banks and high-net-worth individuals, makes a real difference. You get access to options you won’t find on comparison sites or by calling lenders directly.

What You Need to Do Next

If you’re buying investment property, commercial property, or borrowing for business purposes, you need unregulated bridging finance. That’s our specialty, particularly for loans from £250,000 upwards where you need speed, flexibility, and access to specialist lenders.

If you’re ready to discuss your specific situation, call us on 0330 030 5050. We’ll ask about your property, your timeline, and your exit strategy. We can usually give you a clear view of your options within 24 hours.

Have the property details ready, know roughly how much you need to borrow, and have an idea of how you’ll repay the loan. That’s enough to get started.