Regulated Bridging Loan

How Much Does a Regulated Bridging Loan Cost?

As high value, short term finance, regulated bridging loans typically cost more than standard residential mortgages.

Most regulated bridging loans include an arrangement fee, often around 2 percent of the loan amount. For example, borrowing £500,000 would usually involve a £10,000 arrangement fee.

Interest is charged monthly rather than annually. While headline rates may appear competitive when compared to specialist mortgages, the total cost increases the longer the loan remains in place. For this reason, bridging loans are best suited to situations where repayment is planned in the short term.

In most cases, regulated bridging loans run for a maximum term of 12 months.

When Is a Regulated Bridging Loan Suitable?

As with any secured borrowing, it is essential to understand the risks involved. If the loan cannot be repaid, the lender may repossess the property.

That said, FCA regulated bridging finance can be appropriate in a number of specific scenarios, including:

• Purchasing a property at auction where completion is required within 28 days
• Completing a house purchase before an existing home has sold
• Buying a non mortgageable property for renovation prior to moving in

Because every situation is different, suitability depends on your wider plans, your finances, and your exit strategy. This is where specialist advice becomes particularly important.

At GPS Financial, we advise clients on regulated and unregulated bridging loans every week, including time critical residential purchases and complex personal circumstances.

Alternatives to a Regulated Bridging Loan

Depending on your circumstances, other finance options may be more suitable.

Unsecured lending such as personal loans, credit cards, or overdrafts can raise smaller sums, often up to around £30,000. Interest rates can be high, so careful comparison is essential.

Remortgaging your current property may allow you to release equity at a lower interest rate. Arrangement fees and valuation costs still apply, and timescales are usually longer.

Second charge mortgages provide another option. These allow you to borrow against a property that already has a mortgage without replacing the existing loan.

You can read more about second charge options here

In some cases, other specialist products such as development finance or equity release may be appropriate, depending on the project and borrower profile