The FCA laid out the roadmap for its Mortgage Rule Review, with first-time buyer lending, later life lending, innovation and vulnerable customers being key areas singled out.
Within the first-time buyer segment, the regulator said it would “explore options to update the term limit and extension requirements for regulated bridging loans”, as well as “difficulties caused by the current term limit” and the “potential harm cause[d] by more flexible term extension options and a longer defined term limit”.
Vic Jannels, CEO of the Bridging & Development Lenders Association (BDLA), said it was an area that the trade body had been campaigning about for some time and it was “pleased the FCA has taken on board the concerns raised” around the 12-month term limit on regulated bridging lending.
He continued: “Regulated bridging loans are often used by consumers at high-pressure moments – from auction purchases to refurbishment projects and probate – and a one-size-fits-all 12-month cap doesn’t reflect market realities.
“We have consistently said the current rules can unintentionally penalise borrowers facing unavoidable delays – whether that’s material shortages, chain breaks or a slower sales market. The FCA’s recognition of these challenges is a welcome step forward.
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“This isn’t about relaxing protections. It’s about ensuring bridging finance remains a practical solution, backed by robust underwriting and a credible exit. A more flexible approach – with the right safeguards – will ultimately deliver better outcomes for consumers and lenders alike.”
Jason Berry, group sales director at Crystal Specialist Finance, agreed that bridging has “long played a vital role in enabling transactions that would otherwise fail”, such as from chain repair to downsizing and renovation, and the FCA’s “acknowledgement of changing exit timescales reflects a maturing market”.
“This is not about pushing bridging unnecessarily; it is about ensuring customers can access the right solution, with the right safeguards, at the right time. If modernisation leads to faster, more efficient mainstream mortgage processes, that is good for both the overall market and all consumers.
“Equally, where short-term finance remains the most appropriate route, specialist lenders and distributors must continue to set the bar high so responsible advice, transparency and suitability are absolute givens.
“Ultimately, anything that enhances choice, supports innovation and improves outcomes for customers should be warmly welcomed – and this roadmap signals genuine progress,” he noted.
Changes to regulated bridging will need to be ‘implemented carefully’
Duncan Kreeger, founder and CEO of Tab, said the FCA’s review of regulated bridging is “timely and necessary”.
“The market has evolved significantly since the current rules were set. A review of the term limit and extension requirements could bring welcome flexibility, particularly for borrowers using bridging as a genuine short-term solution while arranging long-term finance or completing complex transactions.
“If implemented carefully, updates could improve outcomes for consumers by allowing more realistic timelines and reducing pressure at term end. However, any changes must strike the right balance between consumer protection and commercial practicality. Overregulation risks limiting access to credit for those with sound exit strategies who simply need more time,” he said.
Kreeger added that it was an “opportunity to modernise the framework and reflect how regulated bridging is used today”.
“Done well, it could support better outcomes for both borrowers and lenders. Clarity, transparency, and proportionality will be key,” he noted.
‘Element of risk’ comes with ‘greater flexibility’
John Tarazi, director and co-founder of Echo Finance, said “largely, this is a positive change for the industry”.
He explained that 12 months is a “particularly rigid deadline”, especially when considering the “frequency of potential setbacks, broken chains or the knock-on effect of supply chain issues during renovation projects”.
“A bit more flexibility with bridging deadlines will help prevent penalty fees and the hassle of reapplication after real world delays. Of course, there’s always an element of risk that comes with greater financial flexibility. Compounded interest has the potential to spiral into financial distress far more quickly than standard interest charges. As little as a 6-12-month extension for property sale will certainly eat into profits and has the potential to result in negative equity in some cases.
“However, when used with caution, most finance products deliver more positive than negative outcomes. The FCA will need to safeguard their decision with stricter requirements on the lender in terms of proving that an extension is in the customer’s best interest. But a careful review of the exit strategy at the time of extension should facilitate that,” he noted.
