Mercantile Trust Unregulated Bridging Loans: What Brokers Need to Know

Bridging cases often arrive with pressure attached. An auction deadline that cannot move. A refurbishment that needs to start now, not next month. A chain at risk of collapsing. A property that does not fit high street lending criteria.

That is where an unregulated bridging loan can help.

Speed matters, but what often makes a bridging case work is a lender that will look at the whole picture: the security, the exit strategy, the borrower’s circumstances, and the parts of the case that do not fit neatly into a standard application form.

At Mercantile Trust, we work closely with brokers to provide practical bridging finance solutions for a wide range of client scenarios. Our approach is based on manual underwriting, direct access to decision-makers, and a clear understanding of complex property finance cases.

This guide explains what brokers need to know about unregulated bridging loans, when they may be suitable, and how Mercantile Trust can support broker-introduced cases.

What is an unregulated bridging loan?

An unregulated bridging loan is a short-term secured loan used for business, investment, or property transaction purposes where the security property is not the borrower’s home, or their tenant is a *close family member.

Unregulated bridging loans are commonly used for buy-to-let purchases, auction completions, light refurbishment, capital raising, business-purpose borrowing, and lending against commercial or semi-commercial property.

It is important to identify the regulatory status of a case early. A loan is not unregulated simply because it is described that way. The status depends on the purpose of the loan, the borrower’s circumstances, the security property, and how the property is used.

*Close family usually includes a spouse, parents, children, grandparents, siblings, and grandchildren.

Regulated vs unregulated bridging loans

The key difference between regulated and unregulated bridging loans is how the security property is used.

A regulated bridging loan usually applies where the property is, or will be, occupied by the borrower or a close family member. These cases fall under FCA mortgage regulation and may involve additional advice, affordability, and consumer protection requirements.

If the case involves a residential property that is, or will be, occupied by the borrower or their close family, our sister company Central Trust may be the more appropriate route.

An unregulated bridging loan is generally used for investment, business, or commercial purposes. This may include buy-to-let property, commercial or semi-commercial security, auction purchases, refurbishment, capital raising, or development-related funding where the borrower or close family member does not live in the security property.

A related exception is our Homeowner Business Loan, which is a second charge loan secured against residential property for business purposes only.

Unregulated bridging loans do not fall under the same FCA consumer protection rules as regulated mortgage contracts. This does not make them less legitimate, but it does make it especially important for brokers to work with a lender that takes underwriting, suitability, security, and exit strategy seriously.

When unregulated bridging loans can be useful

Buy-to-let purchases

Unregulated bridging finance can help landlords or property investors complete on a buy-to-let purchase before longer-term finance is in place.

Auction purchases

Auction purchases often come with strict completion deadlines. In many cases, a standard mortgage may not complete quickly enough, making bridging finance a practical short-term option.

Light refurbishment

A bridging loan can help fund light refurbishment work before a property is let, sold, or refinanced onto a longer-term mortgage.

Business-purpose borrowing

Some clients may want to raise funds against property for business purposes. Mercantile Trust can consider second charge lending in these scenarios, subject to criteria.

Chain break situations

Where a property transaction is at risk because another sale or refinance has been delayed, bridging finance may help keep the transaction moving.

Capital raising against investment property

Clients may be able to release equity from a buy-to-let, residential (Business purposes only), commercial, or semi-commercial property to fund refurbishment, business needs, or further property purchases.

Below market value purchases

Some lenders may be cautious with below market value purchases. At Mercantile Trust, we will review the valuation, security, exit strategy, and overall strength of the case.

Non-standard properties

Unusual security does not always mean an automatic no. We will consider non-standard property types where the case makes sense, and the exit route is clear.

Second charge bridging and flexible security

Second charge bridging can be useful where a client already has a first charge mortgage in place and does not want to disturb it but still needs additional short-term funding.

This may be for business purposes, investment, refurbishment, or another property-related requirement. Mercantile Trust can consider second charge lending on residential property for business purposes only, as well as on buy-to-let properties.

We can also consider flexible security structures that may not fit mainstream lending criteria, including:

• Equitable charges
• Cross charging
• Below market value security
• Non-standard property types

For second charge loans and first charge loans under £100,000 in England, Wales, and Scotland, we use internal legals at no additional cost, helping to make the process more efficient for both brokers and their clients.

Why brokers place bridging cases with Mercantile Trust

Many brokers come to Mercantile Trust because the case needs a conversation rather than a tick-box decision.

Our manual underwriting approach means an experienced person reviews the file, not just the numbers, but also the story behind them. This is particularly useful where a case involves an unusual security structure, a tight deadline, a smaller loan size, or a client with previous credit issues.

Brokers also have direct access to our underwriting and sales teams, which helps when a case needs a clear answer quickly.

We can consider applications from personal borrowers and limited companies, and we review clients with past credit issues on their own merits. Loan size does not have to be large either. We still have appetite for smaller cases that may not suit every lender.

Got a bridging case to discuss?

If your client needs fast, flexible short-term finance for an auction purchase, investment property, refurbishment, second charge loan, or a case with an unconventional security structure, it is worth speaking to us early.

The earlier we see the details, the quicker we can let you know whether there is a route forward.

Speak to the Mercantile Trust team today.

Broker FAQs: Quick Answers