Unregulated Bridging Loans? What Are They?

Unregulated Bridging Loans

Unregulated Bridging Loans

Unregulated bridging loans also known as a bridge loan or bridging finance, is a type of short-term loan that is secured against a property. It is commonly used to bridge the gap between the purchase of a new property and the sale of an existing property.

An unregulated bridging loan is designed to provide temporary financing until a more permanent funding source, such as a mortgage or long-term loan, can be obtained.

Are you looking for a quick financial solution that allows you to proceed with a project? You may want to buy a property at auction but arranging a mortgage takes too long for the short completion deadline.

You may have found the perfect new home but haven’t sold your existing one yet and are worried about losing the new property in the meantime.

What Can An Unregulated Bridging Loan Be Used For?

  1. Property purchases: It can be used to fund the purchase of a new property before the sale of an existing property is finalized. This allows borrowers to secure a new property quickly without waiting for the sale proceeds.
  2. Property development: It can provide financing for property developers to acquire land or property for development projects. This includes refurbishments, conversions, or new constructions.
  3. Auction purchases: Bridging loans can be used to finance the purchase of properties at auctions, where quick funding is often required.
  4. Property renovations: It can be utilized for funding property renovations or improvements to increase the value of the property before selling it.
  5. Buy-to-let investments: Bridging loans can be used to finance the purchase of investment properties that are intended to be rented out.
  6. Business purposes: In some cases, borrowers may use unregulated bridging loans for business purposes, such as short-term cash flow needs, purchasing inventory, or covering operational expenses.
  7. Divorce purposes: Some clients may need to use a bridging loan to satisfy a court order for settlement of a divorce hearing. Bridging loans can be used for this type of settlement providing there is a bridging loan exit available to repay the bridge loan.
  8. Tax loan bridge: A bridging loan is a short-term funding solution enabling you to pay off an urgent HMRC tax bill within a short time frame. Again an exit facility or option will need to be in place to repay the bridge loan.

The above are just a few of the many situations where a bridging loan can be used and of course there are many other reasons that a property bridging loan can be used which we haven’t listed. Get in touch if your situation is not listed above to see how we can help.

Unregulated Bridging Loan Criteria

Below are the main criteria points:

  • Up to 80% Loan to Value (or 100% with additional property security).
  • Property in a poor state of repair considered.
  • Rates from 0.50% per month up to 1.2%.
  • Loans from £50,000 with no maximum loan size.
  • Borrow from 1 month up to 24 months.
  • Monthly interest or can be rolled into the loan.
  • Any exit route considered.
  • Adverse credit accepted.
  • Previously discharged bankrupts accepted

It’s important to note that unregulated bridging loans typically have higher interest rates compared to traditional loans and will require a valuable property asset as collateral. Additionally, the availability and terms of unregulated bridging loans can vary across lenders, so it’s advisable to consult with financial professionals or lenders to understand the specific options and requirements for such loans.

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    Product Features

    Max LTV Up to 75%
    Interest Rate From 0.43% to 1% per month
    Charge Types 1st, 2nd & 3rd considered
    Loan Term 1-24 months (maximum 12 months for regulated loans)
    Interest Type Added to the loan, deducted or serviced
    Completion Time            10 days – 3 weeks

    Bridging Loan Criteria

    • Residential, commercial, development property or land acceptable
    • Available to individuals, partnerships, LLPs, Ltd companies, offshore companies, foreign nationals and pension funds
    • Minimum applicant age 18 years – no maximum age
    • Available in England, Scotland, Wales, Southern Ireland and Northern Ireland
    • Adverse credit accepted (on a case by case basis)
    • Loans from £50,000 with no maximum loan size

    What Are The Advantages Of Unregulated Bridging Loans?

    Here are some of the advantages associated with unregulated bridging loans:

    1. Flexibility: Unregulated bridging loans are often more flexible compared to regulated loans, as they are not subject to the same stringent regulations and requirements. This flexibility allows borrowers to negotiate terms and conditions that are tailored to their specific needs.
    2. Quick access to funds: Unregulated bridging loans can be processed and approved relatively quickly, providing borrowers with swift access to funds. This can be particularly useful in time-sensitive situations where traditional lending processes may be too lengthy.
    3. Wider range of property types: Unregulated bridging loans are not limited to specific property types. They can be used for various purposes, including residential, commercial, and mixed-use properties, as well as land acquisition and development projects. This versatility makes them suitable for a broader range of borrowers and investment opportunities.
    4. Less paperwork and documentation: Compared to regulated loans, unregulated bridging loans often require less paperwork and documentation. The streamlined application process can save time and effort for both borrowers and lenders.
    5. No income verification: Unregulated bridging loans may not require extensive income verification, making them more accessible to borrowers who may have irregular income streams or limited financial documentation.
    6. Potential for higher loan amounts: Unregulated bridging loans may offer higher loan amounts compared to regulated loans, as they are not subject to the same loan-to-value (LTV) restrictions. This can be beneficial for borrowers who require substantial financing for their projects.
    7. No monthly payments – Where your bridge finance interest repayments are rolled up or deducted, there are no monthly payments to make. This can be a major help to cash flow during a property refurbishment or marketing period.

    Additionally, unregulated bridging loans may lack certain consumer protections provided by regulatory frameworks, so it’s essential to fully understand the terms and conditions before proceeding. Consulting with a financial advisor or specialist lender is advisable to assess the suitability of an unregulated bridging loan for individual circumstances.

    What Are The Differences Between Regulated and Unregulated Bridging Loans

    Regulated and unregulated bridging loans differ primarily in the level of consumer protection and regulatory oversight they receive. Here are the key differences between the two:

    1. Regulatory Framework: Regulated bridging loans fall under the purview of the FCA financial regulations and are subject to specific legal requirements set by the UK regulatory authorities. Unregulated bridging loans, on the other hand, do not fall within the scope of such regulations.
    2. Consumer Protection: Regulated bridging loans offer a higher level of consumer protection because they are subject to FCA regulations designed to safeguard the interests of borrowers. These regulations aim to ensure transparency, fair treatment, and responsible lending practices. Unregulated bridging loans do not have the same level of prescribed consumer protection measures.
    3. Borrower Eligibility: Regulated bridging loans are typically available to individual borrowers, including consumers and small businesses. These loans are subject to affordability assessments and credit checks to ensure that borrowers can reasonably meet their repayment obligations. Unregulated bridging loans are generally offered to corporate entities or sophisticated investors who may not require the same level of consumer protection.
    4. Lender Conduct: Regulated bridging loan lenders must comply with specific rules and guidelines regarding their conduct, including advertising standards, disclosure requirements, and the fair treatment of borrowers in the UK. Unregulated bridging loan lenders have more flexibility in their practices as they are not bound by the same regulations.
    5. Loan Terms: The terms and conditions of regulated and unregulated bridging loans can vary. Regulated bridging loans may have stricter limits on interest rates, fees, and charges to protect borrowers from excessive costs. Unregulated bridging loans may have more flexibility in terms of interest rates and fees since they are not subject to the same regulatory constraints.
    6. Legal Recourse: Borrowers of regulated bridging loans have access to additional legal recourse in case of disputes or unfair treatment by the lender. They can seek assistance from the FCA in the UK or pursue legal action if necessary. Unregulated bridging loan borrowers may have limited avenues for legal recourse as they are not protected by the same regulatory framework.

    It’s important to note that the specific regulations and requirements for bridging loans can vary depending on the country or jurisdiction. Therefore, it’s advisable to consult local financial regulations and seek professional advice when considering a bridging loan.

    Unregulated Bridging Loan Rates and Fees

    Lender arrangement fee – These fees are charged by the lender and usually charged at 1.5-2% of the loan amount. This fee is usually added to the loan and taken from the monies before they are discharged to the clients solicitors.

    Monthly Interest rate – Lenders charge anywhere from 0.43% per month up to 1.2% per month dependent on the risk of the case.

    Unregulated Bridging – Other Fees

    On top of the interest, there are a number of fees to pay when taking out a bridging loan:

    Broker fees – Brokers charge a fee for their service in sourcing the bridging lender, often around 1% of the loan amount. This is payable when the loan completes, although some charge upfront, on application.

    Early exit fees – Lenders can charge exit fees when the loan is repaid. This fee is usually the cost of 1 month’s interest.

    Valuation fee – This fee is payable at the start of the application process and can vary depending on the value, type and location of the security property.

    Legal fees – These fees are payable in 2 parts – the first before legal work begins and the balance on completion. You will be expected to meet both your own and the lenders legal costs.

    What Properties Can Be Used As Security For Unregulated Bridging Loans?

    The specific properties that can be used as security for unregulated bridging loans may vary depending on the lender’s policies and requirements. However, here are some common types of properties that can be considered as security:

    1. Residential properties: This includes houses, apartments, flats, or any other type of residential property. Lenders may consider both owner-occupied and non-owner-occupied properties.
    2. Commercial properties: These are properties used for commercial purposes such as office buildings, retail spaces, warehouses, or industrial properties.
    3. Land or plots: Vacant land or plots that can be developed or used for construction may also be considered as security for bridging loans.
    4. Mixed-use properties: Properties that have both residential and commercial components, such as a building with apartments and ground-floor retail spaces, can also be considered.
    5. Semi-commercial properties: Shops and mixed use properties can be also be considered for unregulated bridging as long as the commercial side is 60% of the property area.
    6. Investment properties: Properties that are specifically purchased for rental income or investment purposes, such as buy-to-let properties, may be eligible for bridging loan security.
    7. Development projects: If you’re involved in a property development project, the lender may consider the development site or the properties being developed as security.
    8. Uninhabitable property: If you are refurbishing or converting an uninhabitable property to a live-able property then lenders may consider unregulated bridging financing.

    What Is The Application Process For A Non Regulated Bridging Loan?

    The application process for a non-regulated bridging loan can vary depending on the lender, but here is a general outline of the steps involved:

    1. Initial inquiry: Get in contact with us regarding the property or project requiring bridging financing. Provide basic details such as your name and contact information. During this stage, you will be asked to provide additional details about the property, a brief overview of the property such as address and current value and the purpose of the loan plus planned works to the property.
    2. Broker Consultation: We will then reach out to our bridging lender panel and discuss your required financing with the lender.
    3. Lender terms: If the lender determines that your project is feasible they will release to us all the terms of lending such as upfront fees and interest rates.
    4. Application submission: If the lender determines that your application is feasible, you will be required to complete a formal application form. This form will ask for detailed information about your property, project finances, business details, and any supporting documentation they may require. The documentation will include property valuation reports, legal documents, identification proof, and bank statements.
    5. Property valuation: The lender will request a professional valuation of the property offered as security to determine its current market value. This valuation helps the lender assess the loan amount they can offer and the loan-to-value (LTV) ratio.
    6. Offer and terms: If your application is approved, the lender will provide you with a formal offer letter. This letter will outline the terms and conditions of the loan, including the loan amount, interest rate, repayment schedule, fees, and any other relevant details. Take the time to review the offer carefully.
    7. Legal process: Once you accept the loan offer, the lender will instruct their solicitors to prepare the legal documentation. Your solicitor will also be involved in this process to review and ensure that your interests are protected. They will handle the legal aspects of the bridging loan, including property searches, title checks, and registration of the charge against your property in return for the non regulated bridging loan.
    8. Loan completion: After the legal process is completed, the bridging loan will be finalized, and the funds will be disbursed to you or as per your instructions to your solicitor. The loan term will commence, and you will be responsible for making repayments as per the agreed bridging loan schedule.

    Frequently Asked Questions About Unregulated Property Bridging Loans?

    Q: What is an unregulated property bridging loan?

    A: An unregulated property bridging loan is a type of short-term financing that allows individuals or businesses to quickly bridge the gap between the purchase of a new property and the sale of an existing one. Unlike regulated bridging loans, which are subject to consumer protection regulations, unregulated bridging loans are not governed by specific rules and restrictions.


    Q: Who provides unregulated property bridging loans?

    A: Unregulated property bridging loans are typically offered by private lenders, alternative finance providers, or specialist bridging loan companies. These lenders are not subject to the same regulatory oversight as banks or traditional financial institutions.


    Q: What are the advantages of unregulated property bridging loans?

    A: Some potential advantages of unregulated property bridging loans include faster processing times, flexible eligibility criteria, and a higher likelihood of approval compared to traditional lenders. They can be useful for borrowers who may not meet the strict criteria of mainstream lenders or require funds urgently.

    Q: What are the risks associated with unregulated property bridging loans?

    A: Unregulated property bridging loans come with certain risks that borrowers should be aware of. These loans often have higher interest rates compared to regulated loans, which can result in increased costs. Additionally, since the lenders are not subject to the same regulations, borrowers may have less protection in case of unfair practices or disputes.

    Q: How long do unregulated property bridging loans typically last?

    A: The duration of an unregulated property bridging loan can vary depending on the lender and the specific terms of the loan. Typically, these loans have shorter terms ranging from a few months through to 24 months. However, some lenders may offer extensions or refinancing options if the borrower needs more time to repay the loan.

    Q: What types of properties can be used as collateral for unregulated bridging loans?

    A: Unregulated bridging loans can be secured against a variety of property types, including residential properties, commercial properties, land, and even non-standard properties such as uninhabitable or partially completed properties. The value and marketability of the property will play a significant role in determining the loan amount and terms.

    Q: Are credit checks required for unregulated property bridging loans?

    A: While credit checks are still common for unregulated property bridging loans, the criteria may be more flexible compared to traditional lenders. Private lenders or alternative finance providers may consider other factors such as the value of the property and the borrower's exit strategy (how the loan will be repaid) when assessing the loan application.

    Q: How quickly can funds be obtained through an unregulated property bridging loan?

    A: One of the main advantages of unregulated property bridging loans is their speed. Depending on the lender and the complexity of the application, funds can often be obtained within a few days or weeks, making them a viable option for borrowers who require immediate access to capital.

    Q: Can unregulated property bridging loans be used for any purpose?

    A: Yes, unregulated property bridging loans can be used for various purposes. Whether it's purchasing a new property, renovating a property, funding a property development project, or addressing urgent financial needs, these loans offer flexibility in their usage.

    Q: How should borrowers approach the process of obtaining an unregulated property bridging loan?

    A: It is important for borrowers to conduct thorough research and due diligence when considering an unregulated property bridging loan. They should compare multiple lenders, evaluate interest rates and fees, understand the terms and conditions, and seek legal or financial advice if necessary. It is also recommended to have a clear and realistic exit strategy in place to repay the loan within the agreed-upon time frame.

     

    Unregulated Bridging Loans – List Of Cities in The UK That Our Lenders Offer Financing

    Unregulated Bridging Loans – United Kingdom

    1. London
    2. Birmingham
    3. Manchester
    4. Glasgow
    5. Leeds
    6. Newcastle
    7. Sheffield
    8. Liverpool
    9. Bristol
    10. Edinburgh
    11. Cardiff
    12. Belfast
    13. Nottingham
    14. Southampton
    15. Leicester
    16. Brighton and Hove
    17. Plymouth
    18. Reading
    19. Bradford
    20. Stoke-on-Trent

    Unregulated Bridging Loans – Scotland

    1. Glasgow
    2. Edinburgh
    3. Aberdeen
    4. Dundee
    5. Inverness
    6. Stirling
    7. Perth
    8. St. Andrews
    9. Paisley
    10. Kirkcaldy
    11. Ayr
    12. Greenock
    13. Livingston
    14. Cumbernauld
    15. Hamilton
    16. Dunfermline
    17. East Kilbride
    18. Coatbridge
    19. Falkirk
    20. Kilmarnock

    Unregulated Bridging Loans – Ireland

    Northern Ireland:

    1. Belfast
    2. Derry/Londonderry
    3. Lisburn
    4. Newry
    5. Craigavon
    6. Bangor
    7. Newtownabbey
    8. Ballymena
    9. Newtownards
    10. Carrickfergus

    Republic of Ireland:

    1. Dublin
    2. Cork
    3. Limerick
    4. Galway
    5. Waterford
    6. Drogheda
    7. Swords
    8. Dundalk
    9. Bray
    10. Navan

    How Does Bridging Finance Work for Short-Term Loans?

    Short term bridging finance is a type of loan that helps bridge the gap between the purchase of a new property and the sale of an existing one. It provides immediate funds to complete the transaction quickly. Typically, these loans have higher interest rates and shorter terms, but they offer flexibility and a quick turnaround. It’s a useful solution for individuals or businesses who need immediate capital for a short period.

    Unregulated Bridging Loans – Wales

    1. Cardiff
    2. Swansea
    3. Newport
    4. Wrexham
    5. Barry
    6. Neath
    7. Cwmbran
    8. Llanelli
    9. Merthyr Tydfil
    10. Bridgend
    11. Port Talbot
    12. Pontypridd
    13. Aberdare
    14. Colwyn Bay
    15. Rhyl
    16. Penarth
    17. Bangor
    18. Prestatyn
    19. Llandudno
    20. Carmarthen
    Platinum Global Bridging Finance is a distinguished high-net-worth finance broker. We specialize in providing tailored financial solutions, including Property Bridging Finance, Development Finance, Lombard Loans, Single Stock Loans, Margin Stock Loan and Commercial Property Finance tailored to meet the diverse needs of our clientele seeking robust financial lending solutions.

    Unregulated Bridging Loans – £50k to £500m 1 to 24 Months June 9, 2023