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At Goldhill Finance, our emphasis is on making unregulated bridging loans accessible at a fast pace. However, we also think that an educated borrower makes better decisions. By understanding the similarities and differences between the two, you can make the decision that’s right for you.
A simple summarisation of bridging finance
A bridging loan is a short-term finance option intended to fill the space between two events. This is especially useful in occasions where speed is of urgent need, such as completing on a house buy or needing to fulfill an auction bid before deadline passes.
Because of their flexibility and speed, bridging loans have become an important option for everyone from homebuyers to property experts.
Key Similarities
Despite the fact that regulated bridging loans and unregulated bridging loans are geared towards different buyers, they have a few similarities:
Short-term in nature
These loans are designed to be short-term loans, meaning they are to be repaid in a matter of months or a maximum of 12 to 24 months. They are not designed to be long-term loans, but rather to take advantage of a great opportunity in a short period of time.
Accessing these loans takes a short period of time
Bridging loans are known to be accessed in a short period of time. They are much faster than conventional mortgages. While the period of time taken to access these loans may vary, it should be noted that they are faster than conventional mortgages.
Backed by a viable security
The loan is normally backed by land or secured against property, which serves as security. The security of the asset ensures that lenders can offer large amounts of loans and do so quickly.
What is a regulated bridging loan?
A regulated bridging loan is a financial product that comes under the umbrella of the Financial Conduct Authority’s (FCA) regulation. This applies to a situation where the customer is an individual and the loan is secured against a property that the customer either lives in or intends to live in as their main residence.
Key features of the regulated bridging loan, in simple terms:
Better consumer protection: This is because the loan is secured against the customer’s home. This ensures the customer is treated fairly and made aware of the potential risks.
Affordability checks: In order to ensure the customer can pay the money back, an affordability test is conducted.
More structured application process: To meet regulatory requirements, the application process involves more paperwork. This may involve the borrower’s income statements, legal procedures, and more.
Longer timeframe for completion: While bridging loans take a shorter time compared to other financial products, regulated bridging loans take a longer time compared to unregulated bridging loans.
What is an unregulated bridging loan?
An unregulated bridging loan is a loan that is not supervised by the FCA and is usually taken for business or investment purposes. It’s usually used by property investors, developers, and businesses.
Breaking down the key points of unregulated finance:
Speed and efficiency are the drivers of this process, since these bridging loans are not regulated by the FCA, thus the process is quick. This is particularly important to investors with auction deadlines or offers at below-market value.
Lending criteria are not so stringent, since with unregulated bridging loans, the deal is more important than the borrower’s income.
Efficiency in administration is present, since while due diligence is still part of the process, it is streamlined, which is particularly important to seasoned borrowers.
Investor and business focus is the main driver. These facilities are usually taken to fund buy-to-let schemes, commercial properties, or to purchase land, which is usually used for business purposes.
At Goldhill Finance, we offer unregulated bridging loans that offer quick and flexible funding options for the needs of property professionals.
Which one is the best for you?
Making a decision between a regulated and unregulated bridging loan boils down to the use you wish to put the loan to.
If the loan is secured on your home, a regulated loan is a necessity, as it is the law. If you are using the loan to purchase or re-mortgage an investment property, or for a development scheme, then an unregulated bridging loan would be the better option.
Chat with Goldhill Finance
At Goldhill Finance, we know the speed and complexity of the property market. If you are looking for a lender that can provide you with a quick and unregulated bridging loan, then you are in the right place.