Understanding Unregulated Bridging
An unregulated bridging loan is a widely used option for short-term finance particularly for those that need to finalise a property transaction swiftly. Its flexibility allows it to be tailor made to meed the requirements of the individual borrower, helping to overcome the limitations that are often associated with regulated briging loans. It is an especially popular choice for time-sensitive situations.
What can unregulated bridging be used for?
It is typically used to buy a property where neither the applicant nor their family will live, and it will not serve as their main home. Common uses include renovating and selling a property for profit or funding houses in multiple occupation (HMO) projects.
Property Investment
Unregulated bridging loans are commonly used in property investment to secure funding for refurbishment and renovation projects. Investors often utilise this type of financing to purchase properties in need of improvement, carry out necessary upgrades, and enhance the overall value before reselling them for a profit.
Quick Property Purchases
It can be an effective solution for facilitating quick property purchases, especially in competitive and high-demand markets. They provide fast access to short-term funding, allowing buyers to secure properties without delays that can occur with traditional mortgage approvals. By offering a streamlined funding process, unregulated bridging loans help buyers move swiftly, increasing their chances of successfully acquiring desirable properties
Capital Access
Unregulated bridging loans provide individuals with rapid access to capital, making them ideal for a wide range of property-related investments and transactions that fall outside the scope of regulated lending. This type of financing is often used when traditional borrowing options are too slow or restrictive, enabling investors to secure funding swiftly for projects such as property acquisitions, developments, or portfolio expansions.
Purchasing at Auction
Properties from an auction have strict deadlines (often only 4 weeks), making it nearly impossible to secure a mortgage, especially as many auctioned properties are in an unmortgageable state due to their condition. Unregulated bridging can offer fast finance, enabling the auction property to be secured without delay and giving buyers the ability to meet tight completion deadlines.
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Benefits of Unregulated Bridging
Discover the benefits unregulated bridging and determin if it's an appropriate financing solution for you.
Speed of Funding
Unregulated bridging loans can be arranged and funded much faster than traditional mortgages, making them ideal for time-sensitive transactions
Flexibility of the Loan
These loans offer greater flexibility in terms of loan structure, repayment options, and eligibility criteria, allowing for tailored solutions to meet individual's needs.
Fewer Restrictions
Unlike regulated loans, unregulated bridging finance isn't subject to the same strict regulatory guidelines, making it easier to access funds.
Property Condition Freedom
Unregulated bridging is often available for properties considered unmortgageable, such as those requiring extensive refurbishment or without basic facilities.
Potential Drawbacks
Explore the factors to consider when choosing unregulated bridging and make informed decisions about your financial future.
Higher Interest Rates
Unregulated bridging loans often come with higher interest rates compared to traditional mortgages, making them a more expensive financing option.
Short-Term Nature
These loans are designed for short-term use, meaning borrowers must have a clear exit strategy, such as selling the property or refinancing, to avoid financial strain.
Less Consumer Protection
Since they fall outside of regulatory guidelines, unregulated bridging loans offer less consumer protection, which can increase risk for inexperienced borrowers.
Less Transparency
Unregulated loans may not have the same level of transparency regarding fees, interest rates, and repayment terms, potentially leading to hidden costs.
Making Bridging Finance Simple!
*This information is intended as a general guide only and should not be considered as a recommendation or advice regarding the suitability of any particular bridging option for your situation. All options are subject to the applicant(s) meeting the specific eligibility criteria of the lender. We recommend scheduling an appointment for personalised bridging advice tailored to your individual needs and circumstances.
