Unregulated Bridging Loans
Unregulated Bridging Loans – No Broker Fees
An unregulated bridging loan allows you to borrow money quickly and for almost any purpose. Find out how they work and get the best deal with ABC Finance.
Over 30,000 loan-seekers helped
FCA Authorised – Fully regulated
Receive your funds in as little as 5 days
Market-leading interest rates
CeMAP Qualified Advisors
No Broker Fees
Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in bridging loans
Unregulated bridging loans allow you to raise funds to purchase or refinance a property quickly.
In this guide, we break down what they are, what they can be used for and what interest rate you can expect to pay.
Read on to find out more or get in touch to get the best deal with ABC Finance.
What is an unregulated bridging loan?
Unregulated bridging finance is a short-term, property-backed loan which is designed to ‘bridge’ a gap in funding. A bridging loan is unregulated if it is secured against a property that you have never, and will never reside in.
Unregulated refers to the fact that the loan being taken does not fall under the protection of the Financial Conduct Authority (FCA). This is because the loans are for business or investment purposes, such as a buy to let property. Even ‘High Street’ Banks offer unregulated loans.
FCA Loans that are covered by the FCA are called regulated bridging loans.
This means that when taking out a non-regulated loan, you will have less protection in the event of something going wrong. The FCA rules focus on treating customers fairly in both the advice given and how the account is handled once the loan is in force.
Key Features
Max LTV
Up to 90%
Interest rate
From 0.49% per month
Charge types
1st, 2nd & 3rd considered
Term
1-36 months (maximum 12 months for regulated bridge loans)
Interest type
Added to the loan, deducted or serviced
Completion timescale
5 days – 3 weeks
Criteria
Residential, commercial 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 and Northern Ireland
Adverse credit accepted (on a case by case basis)
Loans from £10,000 with no maximum loan size
What can unregulated bridging finance be used for?
We can provide funding for almost any purpose; the most common unregulated bridging loan uses are:
- Adding value via property refurbishment or conversion
- Purchasing a property quickly, such as an auction purchase
- Purchase, renovate and sell. Also known as property flipping
- Repaying development finance
- Business purposes such as a cash injection
- Expanding your property portfolio
We can consider applications for any legal purpose, so if you’re looking to borrow for another purpose, get in touch and there is a good chance that we’ll be able to help.
How much can I borrow?
We can offer unregulated bridging loans from £10,000 with no maximum loan size.
The amount you can borrow is based on your property value, the loan to value (LTV) of your application and how much you can afford to repay based on your chosen exit strategy.
The maximum LTV we can offer is 80% for most applications, or 90% for property refurbishment finance projects that will gain value as a result of the works. We can fund up to 100% of the purchase price for below market value transactions.
How much do unregulated bridging loans cost?
Unregulated bridging loans cost between £490 and £790 per month, per £100,000 borrowed. This gives you an interest rate of 0.49%-0.79% per month. This interest can either be added to the loan or paid monthly.
The interest rate charged is based on the lender chosen and the LTV of your application. Lower LTV applications tend to come with lower rates, with loans under 50% LTV being the cheapest.
On top of the interest charged, there are some fees to consider when looking to take out a bridging loan. They are:
Lender arrangement fee – These fees are charged by the lender and usually sit at 1-2% of the loan amount. This fee is usually added to the loan, although you’re able to pay it on completion should you choose to.
Broker fees – Most brokers charge a fee for their service, often around 1-1.5% of the loan amount. This is usually payable when the loan completes, although some charge a portion upfront. We don’t charge a fee for our service, which can represent a significant saving.
Lender exit fees – Although this is becoming less common, some lenders charge exit fees when the loan is repaid. This fee is usually the cost of 1 month’s interest.
Valuation fee – If a valuation is needed, this fee is payable near the beginning 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.
How long does it take to secure unregulated bridging finance?
Unregulated bridging finance can be completed very quickly, sometimes within a day or two of application. Usually, a completion of 5-14 days is realistic, depending on the lender used.
If you’re looking to secure the lowest rates, it is a good idea to allow slightly longer for completion as the lender will generally insist on more stringent criteria checks.
There is often a trade-off to consider between how long it takes to receive the funds vs how much the loan costs. Some of the cheapest lenders tend to underwrite your loan more diligently and as such, will take longer to complete.
The second point that impacts speed of completion is the instruction of your survey report and the start of the legal process. Instructing both on day one will speed up your application significantly, but does mean you’ll have to pay a fee to the surveyor and solicitor to begin work.
What documents will I need to provide?
To apply for unregulated bridging finance, you must provide the following documents:
- An application form
- Proof of ID & address
- Details of any planned works to the property
- Proof of your chosen exit strategy (while this may not be a physical document, details will be required)
Will I qualify for unregulated bridging?
Yes, there is a great chance of you qualifying for an unregulated bridging loan, as long as you offer a suitable security property, your application is below the maximum loan to value ratio and you have a strong exit strategy.
While not every loan application can be approved, we work with all of the leading bridging loan lenders and can find a suitable option for most borrowers.
If you’re unsure whether you’ll qualify, get in touch now and our team of experienced bridging loan brokers will be happy to talk through your circumstances.
Why should I work with ABC Finance?
At ABC Finance, we’ve been arranging bridging loans since the year 2000 and have a strong reputation for providing great customer outcomes.
We don’t just arrange your loan with no regard for the bigger picture. Instead, we look to understand your circumstances and ensure that you can not only take out the loan, but also repay it without issue.
This is the key to taking out bridging finance. If your exit strategy is not strong, you can run into trouble quickly, so finding the right lender that understands your circumstances and will work with you is far more important than chasing the lowest rate.
We put our customers first and will make sure you get the best deal, from a lender that you can trust.
Frequently Asked Questions
Should I be wary when dealing with an unregulated lender?
Although you should always undertake due diligence on the lender that you’re looking to borrow from, it’s even more important when taking out an unregulated loan. A good broker can be priceless when it comes to understanding the unregulated sector.
There are a lot of new bridging lenders entering the market all the time and it’s important that you work with the right ones. While it’s rare for a lender to be fraudulent, there are often terms included in the contracts that could come back to haunt you.
Although we offer unregulated bridging finance, we are an FCA regulated broker and we strive to treat all our customers with the same level of care whether their application is regulated or unregulated.
What are the benefits of an unregulated loan?
There are a lot more unregulated lenders than regulated, meaning you have a wider choice when taking out this kind of finance.
In addition, there is less restriction around the term offered, unlike regulated loans, terms over 12 months are commonly available.
Finally, there is more scope for lenders to base LTV decisions on the open market value of a property rather than the purchase price.
How can I ensure I’m protected when working with an unregulated lender?
Undertaking research on your chosen lender is a great start.
If you’re still uncomfortable working with an unregulated lender, you could look to work with a regulated broker, to ensure you’re well looked after.
Although the loan would still be unregulated, as FCA brokers, we hold ourselves to a higher standard and will be able to provide clear complaints procedures and accountability.
