Unregulated Bridging Loans: Risks, Benefits, and Key Considerations

Unregulated bridging finance is a powerful short-term funding solution designed exclusively for business purposes. Unlike regulated loans, it is not overseen by the Financial Conduct Authority (FCA), making it an ideal choice for property investors, developers, and businesses seeking quick capital to seize opportunities and drive growth.

What is Unregulated Bridging Finance?

Unregulated bridging finance is defined as a type of short-term funding used for business purposes, which is not covered by FCA regulations.

The classification of a loan as regulated or unregulated depends on the borrower’s living situation and intentions. These loans are typically secured against properties such as buy-to-lets, commercial assets, or development projects and are designed to providing fast access to capital for time-sensitive ventures.

Key Features:

  • Rates from 0.79% per month

  • Up to 80% Net LTV (Loan to Value) – Market leading leverage.

  • Up to 100% LTP (Loan to Purchase)

  • 75% LTGDV

  • Drawdowns – Flexible funding to match your project timeline.

  • Rolled-up interest or Semi-Serviced

  • No ERC (Early Repayment Charges)

Whether you're a seasoned Property Investor or a Developer looking to scale, our unregulated bridging loans provide the financial flexibility and speed you need to succeed. With competitive terms, no valuations, and a focus on your project's success, we’re here to help you achieve your property goals.

Ready to take the next step?

Contact us today to explore how our Unregulated bridging finance can work for you.

Unregulated vs. Regulated Bridging Loans

The key difference between unregulated and regulated bridging loans lies in their purpose:

  • Regulated Bridging Loans: Can be used for personal reasons, such as purchasing a primary residence or upgrading a primary residence.

  • Unregulated Bridging Loans: Strictly for business purposes, making them the preferred choice for:

    • Property Investors: Fund refurbishments, conversions, or portfolio expansions.

    • Developers: Finance large-scale development projects.

    • Businesses: Secure quick capital for strategic investments or growth opportunities.

When it comes to bridging finance, the classification of a loan as regulated or unregulated is not a choice for borrowers—it is determined by the borrower’s intentions and the purpose of the loan. This distinction is crucial, as it dictates the regulatory framework that applies to the loan.

Usage and Purpose Determines Regulation:

The property type alone doesn’t decide if your loan is regulated or unregulated: Even if the loan is secured against an investment property (e.g., a buy-to-let), it can still be regulated if the funds are used for personal reasons. For example, borrowing against a buy-to-let property to fund a personal expense would make the loan regulated.

The loan will be classified as unregulated only if it is used for business or investment purposes, such as property development, refurbishments, or portfolio expansion, and is secured against a property that the borrower or their relatives do not, have not, and will not live in.

What Can Unregulated Bridging Loans Be Used For?

Unregulated bridging loans are a flexible solution for time-sensitive financial situations, such as:

  • Purchasing a new property before selling an existing one – Ideal for securing your next investment without delays.

  • Buying property at auction – Quick access to funds to meet auction deadlines.

  • Property refurbishments – Increase the value of your investment property through strategic upgrades.

  • Business cash flow needs – Provide vital working capital during transitional or growth periods.

  • Purchasing property without a UK footprint – Expand your portfolio internationally.

Are Unregulated Bridging Loans Risky

Unregulated bridging loans are not inherently risky, but like any financial product you should understand the key terms, conditions and their requirements. Unregulated bridging finance is commonly used and is a trusted option for property investors and businesses, offering flexibility and speed for short-term financing needs. Here’s what you need to know:

  • Common in the Market: Unregulated bridging loans are just one type of property finance which falls outside FCA regulation. Other examples include:

    • Buy-to-Let Mortgages

    • Property Development Finance

    • Second-Charge Loans: Securing additional funding against an existing property.

    These types of financing are widely used and trusted by investors and businesses, demonstrating that unregulated loans are a standard and reliable option.

  • Industry Standards: Many bridging lenders adhere to high industry standards through membership in professional bodies such as the Bridging & Development Lenders Association (BDLA) and the Financial Intermediary & Broker Association (FIBA). These organisations promote transparency, ethical lending practices, and some consumer protections.

Key Considerations for Borrowers

While unregulated bridging loans are not inherently risky, borrowers should take the following steps to mitigate potential risks:

  • Understand the Terms: Carefully review the loan terms, including interest rates, fees, and repayment schedules.

  • Work with Reputable Lenders: Brokers know which lenders are most likely to approve your application based on your circumstances, increasing your chances of success. With the average cost of an application being £2,250 it is important to choose the right lender first time to avoid broken deal costs and get it done in the timescale that you need. Unregulated bridging and development finance is a unique industry with tens of thousands of products. Talking to a professional broker can save you tens of thousands of pounds by connecting you with the right financial partner.

  • Have a Clear Exit Strategy: Unregulated bridging finance is a short-term solution, so it’s important to have a plan for repaying the loan, such as selling the property or refinancing.

Mitigating Risks: Industry Standards and Best Practices

While unregulated bridging loans are not subject to FCA regulation, many lenders choose to adhere to high industry standards through membership in professional bodies such as:

These organisations promote transparency, ethical lending practices, and consumer protection, ensuring that borrowers can trust their lenders.

Why Choose Aura Capital?

At Aura Capital, we specialise in unregulated bridging finance, offering:

  • Expert Guidance: Our team will help you navigate the process and find the best loan for your needs.

  • Competitive Rates: Access affordable financing tailored to your project.

  • Fast Approvals: Get the funds you need quickly to seize opportunities.

Whether you're funding a development project, refurbishing a property, or expanding your portfolio, we’re here to support you every step of the way.

  • The Loan-to-Value (LTV) ratio for an unregulated bridging loan typically ranges from 65% to 80%, depending on factors such as the type of property, exit strategy, lender criteria, and the borrower's financial profile.

    Key factors influencing the LTV include:

    • Property type – Residential, commercial, or mixed-use properties may have different LTV ratios.

    • Exit strategy – A strong plan, such as refinancing or property sale, can help secure a higher LTV.

    • Borrower profile – Experienced investors with strong assets and liabilities often have access better terms.

    • Lender policies – Specialist lenders offer higher LTVs and target specific niches in the market. Choosing the right lender will maximise the LTV you are able to receive as a borrower.

    In some cases, lenders may offer up to 100% LTV if additional security, such as another property or valuable assets, is provided.

  • Unregulated bridging loans can be completed in as little as 48 hours, with most transactions finalised within 10-20 working days.

    For clients requiring rapid completion, options like no valuation or using an AVM’s or Desktop valuations can help reduce underwriting time.

    Whilst these products can cost more than their slower counterparts the upfront costs are often lower and the credit and underwriting processes are significantly accelerated.

    For cases with tight deadlines, such as auction purchases, working with a broker who can expedite the process and has leverage with lenders is crucial to ensure timely completion.

  • The unregulated bridging loan market is vast, with thousands of lenders, each specialising in niche sectors.

    Some high-street banks offering unregulated bridging loans (typically through intermediaries or specialist teams) include:

    • HSBC

    • NatWest

    • Barclays

    • Lloyds Bank

    • RBS

    • Santander

    These banks usually work with specialist lenders or brokers to provide unregulated loans for businesses and property investors.

  • Bridging loan interest rates typically range between 0.5% and 2% per month, equivalent to an annual rate of 6% to 24%. This means the cost of borrowing can range from £500 to £2,000 per month per £100,000 borrowed.

    The average interest rate is around 0.95% per month, equating to £950 per month per £100,000. Rates can vary depending on the level of risk the lender is willing to take, often influenced by the loan-to-value (LTV) ratio. The higher the LTV, the higher the perceived risk, which may result in higher interest rates.

  • Unregulated bridging loans lack FCA oversight, meaning fewer consumer protections. Whether a loan is regulated or unregulated depends on your situation; for example, most buy-to-let loans are unregulated as they’re for investment, not primary residence.

    Borrowers should disclose all relevant information to the broker and clarify the loan's purpose and their financial situation. To mitigate risks, ensure a clear exit strategy and fully understand the loan terms, ensuring alignment with financial goals and repayment capabilities.

  • Terms vary by lender, with some imposing early repayment fees and others offering flexible repayment options. As these terms can change during the process, it's crucial to review illustrations, formal offers, and facility letters to check if penalties apply.

    We offer unregulated bridging loans with no early repayment charges—contact us today!

  • Yes, the majority of unregulated bridging loans are used to finance property development projects, including refurbishments and conversions, due to their flexibility and speed.

Top Tips for a Successful Bridging Loan Application

Securing a bridging loan can be a smart solution for short-term financing, but getting your application right is crucial. Follow these expert tips to boost your chances of approval and avoid costly mistakes.

  1. Ensure You Meet the Lender's Criteria
    Before applying, make sure your property and financial profile align with the lender's requirements. Unregulated bridging loans vary widely, so choosing a lender who is eager to take on your deal can help you avoid unnecessary legal and valuation costs.

  2. Work with a Specialist Broker
    A bridging finance expert can help you find the best rates and terms for your situation. Brokers have access to hundreds of lenders, including private investors and family offices, who actively seek new business. Just like insurance, using a specialist broker often provides better value than going directly to the most advertised lenders. They also know which lenders are reliable, fair, and committed to delivering on their promises without last-minute changes.

  3. Have a Strong Exit Strategy
    Lenders want to see a clear plan for repaying the loan. Whether you plan to sell the property, refinance with a long-term mortgage, or use another repayment method, a solid exit strategy reassures lenders and improves your chances of approval.

  4. Choose a Transparent and Fair Lender
    Avoid lenders or brokers who have hidden fees or unfavorable terms. Always ensure that all costs, including interest rates, arrangement fees, and exit fees, are clearly outlined and fully transparent.

  5. Partner with a Reputable Provider
    Choose a lender that aligns with your needs, treats clients fairly, and has a strong market reputation. Some large, heavily marketed lenders impose strict and often punitive terms on direct clients, so be cautious and do your research.

  6. Understand the Loan Terms Before Signing
    Before committing, make sure you fully understand all the terms and conditions. Review interest rates, fees, repayment schedules, and other critical details to ensure they align with market standards and your financial goals.

  7. Work with a Well-Capitalised Lender
    Choose a lender with sufficient funds to complete your loan without delays. Be cautious with peer-to-peer lenders, as they may need extra time to raise capital, and terms could change throughout the process.

  8. Define Your Loan Purpose Clearly
    Lenders and brokers need to understand why you require the loan for regulatory compliance and product matching. Whether it's for property acquisition, development, or covering a short-term cash gap, having a clear and well-documented purpose will strengthen your application.

  9. Avoid Unnecessary Delays and Costs
    Ensure you meet all lender criteria before applying to prevent unexpected cancellations or costly delays. Have your broker verify this in advance, or choose a product that allows switching if needed.

By following these tips, you can streamline your bridging loan application, secure the right funding, and achieve your financial goals with confidence.

How to Apply

  1. Contact Us
    Apply directly with us, and we’ll discuss the pros and cons of no valuation bridging loans, ensuring you understand your options.

  2. Receive a Quote
    Get a personalised quote for a no valuation or desktop valuation bridging loan by submitting your case for a no-obligation quote. We’ll assess your needs and provide a tailored solution.

  3. Guidance
    We guide you through the application process, offering market-leading rates from our investors or the wider bridging loan market. Our expert advice ensures you get the best deal.

  4. Processing
    We handle all aspects of the loan, including underwriting, legal procedures, and valuation (if applicable), until the loan is successfully completed.

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