The bridging sector, although being very small, has many lenders of different sizes in it. The increased competition has advantages, but also creates more complexities.
Lenders are either regulated or unregulated and what this means to borrowers is explained.
Borrowers are advised to look more closely than brand names and to check who the actual lenders are when considering loan options.
Bridging finance is referred to as a ‘specialist’ area of the UK property finance market because it is still a small sector of UK finance.
According to industry figures, bridging lender loan books grew from £13 billion to a record £13.7 billion in Q3 2025.
Regulated bridging accounts for less than 20% of total lending, demonstrating that it is a comparatively small segment of the wider bridging finance sector. The market is therefore predominantly unregulated, with the majority of loans being written outside any regulated framework.
Even though bridging is still a small niche market, it supports a surprisingly long list of lenders. The Bridging and Development Lenders Association (BDLA) directory of lenders runs to dozens of firms, and that is before you add private banks, family offices, smaller specialist funders and the lenders that are not BDLA members.
Having many lenders sounds like good news for borrowers, and in many ways it is. More lenders usually means more choice, more competition and more ways to structure a deal.
Bridging lenders, however, are not all the same, they come in all shapes and sizes.
At one end are large institutions that also offer other finance facilities like mortgages, buy-to-lets, commercial finance, second charges and development finance. At the other end are many small lenders, sometimes backed by just one institutional funding line, a private investor, or a small or large pool of their own capital.
This is important because a lender’s source of funds usually determines:
The cheapest lenders are often those with the cheapest and most reliable funding lines. In most cases the cheapest lender is certainly the best option, but sometimes these lenders cannot handle unusual security, urgent completions, heavy refurbishment, complex legal structures, or large multi-property cases.
More specialist lenders exist because the cheaper lenders can struggle with complex cases.
However, some of the cheapest lenders for rates and costs, who perhaps were once slow and rigid, have now been providing bridging loans for many years, meaning that today they are much more experienced and have evolved to provide more options in order to meet more of their customers’ requirements. Consequently, some of these lenders can now complete quickly on fairly complex cases, so overlooking them when speed and flexibility are required could be an expensive mistake.
Most borrowers these days are able to have it all, speed, complexity and the cheapest rates!
The most important difference between bridging lenders is whether they are regulated or unregulated.
In broad terms, FCA guidance says a mortgage can fall within the regulated mortgage regime where it is secured on land where at least 40% of that land is used, or intended to be used, as or in connection with a dwelling by the borrower, or a relative.
In other words, if the security for the loan is also the borrower’s residence, or if a close relative of the borrower is living there, then the bridging loan is required to be regulated.
The FCA glossary also defines a bridging loan as either a Mortgage Credit Directive rules exempt (MCD-exempt) bridging loan, or a regulated mortgage contract with a term of 12 months or less.
That is why the classic buy before you sell bridge on your own home is normally a regulated bridging loan, while lending on investment property, commercial property, land, offices, shops or non-owner-occupied property is usually unregulated.
Where a lender is authorised by the FCA and has the correct permissions, it operates within a fuller conduct and supervisory framework.
However, if a borrower uses a lender that is not Authorised and Regulated by the FCA, or a lender that is Authorised but does not have the correct permissions on their FCA Authorisation, for the activity that is being carried out, then in both cases the borrower may not have access to the Financial Ombudsman Service, or FSCS protection, if something goes wrong.
The FCA also states that authorised firms can offer both regulated and unregulated products, but its powers are more limited over unregulated products and services.
This last point is really important to understand the different levels of protection borrowers can receive from different lenders.
A lender can be an FCA authorised firm, but still offer their customers an unregulated product. The lender is authorised, but the protection attached to the loan is not the same as it would be on a fully regulated bridging loan.
Regulated lending comes with a higher level of oversight, conduct standards and borrower protection.
Unregulated lending is different. The loan may still be perfectly lawful and entirely normal for the type of transaction, but the borrower does not have the same protections if a dispute arises.
The harshest clauses, highest renewal fees and most expensive default fees, are found in the unregulated side of the bridging market.
These terms are easily confused, as some borrowers read on a lender’s website that they are ‘registered with the FCA’, then confuse this with them being ‘Authorised and Regulated by the FCA’.
In March 2026, the FCA said there were around 1,200 Annex 1 firms registered with it solely for anti-money laundering purposes. These firms are not subject to the FCA’s wider rulebook, and customers of Annex 1 firms are not able to access the Financial Ombudsman Service.
Borrowers should never assume that they are protected simply because a lender says it is “on the FCA register”.
Lenders who say that they are ‘Registered with the FCA’ are usually due to anti-money laundering requirements. This is not the same as being ‘Authorised and Regulated by the FCA’.
The real questions are whether the firm is authorised, what it is authorised for, and whether the specific loan you are taking out is regulated or unregulated.
One of the easiest mistakes to make is to look at the trading style and assume the whole group sits under the same level of regulation.
Borrowers should check the exact legal entity that is lending the money, not just the trading name or group brand. Use the FCA’s ‘Firm Checker’ to check whether a firm is authorised and whether it has the permission needed to provide the product or service that you are looking to obtain from them.
When checking any loan agreement, take note of the lender’s name on that agreement, and check to see if they are a firm that is ‘Authorised and Regulated by the FCA’.
For example:
Together Personal Finance Limited is a company that is authorised and regulated by the FCA, and are able to provide first charge regulated bridging loans.
This company has the trading style ‘Together’.
Together Commercial Finance Limited, also has the trading style ‘Together’, but they are not Authorised and Regulated by the FCA.
Together’s own figures state that the majority of their loans are unregulated, with a small proportion being regulated. Any regulated bridging loans are written through regulated lenders within their group, typically Together Personal Finance Limited, and the unregulated loans are written through their unregulated companies, quite often Together Commercial Finance Limited.
Some Together customers who we have spoken to, have been surprised to discover that their unregulated bridging loans had ultimately not been provided through an FCA regulated lender.
We are not suggesting for a moment that Together have done this deliberately. Combining a number of the group’s different lenders, all under one trading style, does make brand, marketing and business sense. However, having one big brand with one website, that is a mix of different regulated and unregulated lenders, all sharing the same trading name, is unlikely to ever be the simplest setup to understand.
Most people assume that if their home is being used as security, the loan must be regulated.
The FCA also warned that it is aware of cases where consumers have been encouraged to set up limited companies to access unregulated bridging finance from Annex 1 firms (lenders who are not Authorised and Regulated to provide regulated bridging loans).
When the line between regulated and unregulated bridging loans can become blurred!
This is where the borrowing is said to be for business purposes, where a limited company is the borrower, or where a home is used as a third-party charge to support business borrowing.
This is exactly why the FCA has recently warned about instances where consumers are being encouraged into limited-company structures to access unregulated bridging.
So, if your home is part of the security, but the loan is being presented as unregulated, do not just accept that at face value. Ask why. Ask what protection you are giving up. Ask whether a regulated structure is possible instead. For example, you could possibly raise the loan on a regulated agreement and then lend it to your business as a director’s loan.
There are 2 common reasons why a ‘small minority’ of lenders may push borrowers into having an unregulated loan in place of a regulated one:
Regulated bridging loans are generally limited to 12 months, and for some borrowers this can be quite restrictive.
Loans running over term can sometimes occur when the loan is being used to fund works before a sale, where a buyer pulls out late in the sale process, or where the property is unusual, or has a high value and may simply take longer to sell.
The FCA has itself acknowledged that the current 12 month limit can create difficulties in cases involving building works, major refurbishments, buying and selling delays, and probate.
They are currently looking at this area and have said that they will explore whether the rules on regulated bridging terms and extensions should be updated. Feedback they have received include suggestions such as extending the term to 18 or 24 months, or allowing more flexibility where projects take longer than expected.
The original 12-month limit was put in place because regulated bridging is meant to be a genuine short-term solution, not a substitute for long-term borrowing. It was also at a time when bridging loans were considerably more expensive than longer term finance options.
The FCA has highlighted that when interest rolls up over a long period, there is a greater risk of the borrower’s equity being reduced over time.
Where more time is needed, there may be specialist longer-term regulated mortgage options available through a small number of lenders and private banks, particularly for high-net-worth borrowers. Under FCA guidance, a high-net-worth mortgage customer is someone with annual net income of at least £300,000 or net assets of at least £3 million.
For many borrowers, the key point is that a 12-month regulated bridge can work very well where the exit is clear and realistic, but if the property takes longer to improve, market or sell, it is important to think carefully about whether the term is long enough from the outset.
Last updated: 05 May 2026 | © KIS Bridging Loans 2024 | Privacy Notice | Complaints Policy
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