When is a bridging loan regulated?
A bridging loan is a regulated mortgage when it’s secured on land in the UK and at least 40% of that land is used, or will be used, as a home by you or a close family member: a spouse or partner, parent, brother or sister, child, grandparent or grandchild. It must then be arranged by an FCA-authorised firm and the lender must follow the FCA’s mortgage rules. Regulated bridging loans usually run for up to 12 months.
Bridging on a buy-to-let or other investment property is normally unregulated. See bridging loans for the landlord options.
Common reasons homeowners bridge
- Breaking a chain: buy your next home now and repay the bridge when your current home sells.
- Downsizing: secure the smaller home first, without a rushed sale.
- A home that needs work: buy a property a mortgage lender won’t accept yet, renovate it, then move to a standard mortgage.
- Auction purchases: complete within the auction deadline on a home you plan to live in.
How the FCA rules protect you
- The lender must check that your exit, usually the sale of your current home or a new mortgage, is credible.
- You receive a European Standardised Information Sheet (ESIS) setting out the loan, the costs and the total repayable.
- The firm arranging it must be authorised, and you can complain to the Financial Ombudsman Service if something goes wrong.
What lenders look at
- Your exit: is your home on the market or under offer, and is the asking price realistic? Where the exit is a mortgage, can you afford it?
- Total borrowing across both properties, including any mortgage on your current home, against their combined value.
- Your circumstances: income, credit history and any monthly payments you’ll make during the bridge.
Costs
Interest is charged monthly, typically somewhere between about 0.6% and 1.2% a month, with an arrangement fee, valuation and legal costs. Interest is often rolled up or retained, so there may be nothing to pay monthly. The bridging loan calculator shows the true cost over the time you expect to need it. These are indicative ranges; your lender sets the price for your case.
The risks
If your home takes longer to sell, or sells for less, the bridge runs on and interest keeps building. Allow a realistic buffer in the term and price, and know your plan B before you start. Talk to us early if a sale stalls.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Frequently asked questions
What is a regulated bridging loan?
A bridging loan secured on a property that you or a close family member live in, or will live in. It is regulated by the FCA and must be arranged by an authorised firm.
How long can a regulated bridging loan last?
Regulated bridging loans usually run for up to 12 months, which covers most sales. If you need longer, a different type of regulated mortgage may be needed.
Can I get a bridging loan to buy a house before selling mine?
Yes. This is the most common use of regulated bridging. The lender will want to see that your current home is on the market at a realistic price.
Do I have to make monthly payments on a regulated bridge?
Not always. Interest can be rolled up or retained and repaid when your home sells, or paid monthly if you prefer and can afford it.