How Non-Regulated Bridging Works for Property Investors

By Loui O’Brien, Commercial Manager, Cornerstone Commercial Finance

What Is Non-Regulated Bridging Finance?

For many property investors, speed and flexibility are as important as the deal itself. That’s where non-regulated bridging finance comes in – a short-term funding option that can help experienced investors move quickly, take advantage of opportunities, and keep capital working across multiple projects.

In its simplest terms, a bridging loan is regulated if the property is, or will be, occupied by the applicant or their immediate family. If it is not, and the property is commercial or an investment, it is generally defined as non-regulated. This distinction is important, not only because it determines how the loan is treated, but because it reflects the very different needs of the clients using it.

Why Property Investors Use Non-Regulated Bridging

There are many situations where non-regulated bridging can be a useful tool. Auction purchases are perhaps the most well-known example, with tight deadlines that conventional finance often cannot meet. Refurbishment projects, below-market-value purchases, and opportunities to secure a quick sale at a discount are all common scenarios. In each case, bridging can provide the speed needed to complete while allowing investors to focus on maximising returns.

An alternative some clients consider is buying with cash. While that may avoid borrowing costs, it can also tie up funds in a single property. By using bridging and pricing it correctly into their model, investors can spread capital across multiple projects at once. That flexibility can be a real advantage in a competitive market.

Structurally, a non-regulated bridging loan works much like a short-term mortgage in that lenders take a first charge over the property.

Benefits of Non-Regulated Bridging Loans

One of the biggest benefits is how interest can be handled. With retained interest, the total interest due for the term is deducted from the gross loan at the outset and repaid on redemption. This means that while a property is being refurbished and generating no rental income, the client does not have to make monthly interest payments – freeing up cash flow for other projects.

There is also the option to service the interest monthly, more like a standard mortgage, for clients wanting to maximise their loan-to-value. The key is having the flexibility to choose the most appropriate approach for the project and the client’s wider portfolio.

Planning an Exit Strategy for Bridging Finance

The exit plan is critical. It’s quite easy to lend the money, but getting it back is of course key. As professionals in the industry, we have a responsibility to ensure that the finance works for the client and that they can repay it. The most common exits are selling the property after adding value or refinancing against an uplifted value. In both cases, it’s essential to check that projected sale prices or rental incomes are realistic and sufficient to support the planned exit.

How Advisers Can Help Clients with Bridging Loans

Advisers do not need to be bridging specialists to start the conversation. Asking the right initial questions can help identify opportunities and enable advisers to flag cases for referral to a commercial finance team. My advice is simple: don’t be afraid to have the conversation. You don’t need to be an expert to get a referral in. Just get the initial details and pass them to the right people. We will look after your clients the way you would want them looked after.

By doing so, you can open the door to solutions that help clients move quickly, grow their portfolios, and make the most of the opportunities in front of them.