What the review of bridging loan term limits means for borrowers

Bridging loans are typically designed as short‑term, fast‑moving finance. But with the Financial Conduct Authority (FCA) now reviewing the long‑standing 12‑month cap on regulated bridging loans, the market could be on the cusp of meaningful change.

For consumer and business borrowers alike, this raises important questions. Could longer terms offer more breathing room? Will flexibility come with higher risks? And how might lenders respond?

To unpack all of this, let’s look at what bridging loans are, what the FCA is reviewing, and what the potential changes could mean for different types of borrowers.

What are bridging loans?

Bridging loans are short‑term, secured loans designed to bridge the gap between a financial need and a longer‑term funding solution. Common uses of bridging loans include:

• Buying a property before selling another.

• Funding renovations or development.

• Resolving delays in mortgage approvals.

• Managing probate or inheritance timelines.

Most regulated bridging loans (those secured on a borrower’s home or intended residence) currently have a maximum term of 12 months. This rule exists to keep bridging finance distinct from long‑term mortgage products and to ensure borrowers don’t become reliant on high‑cost, short‑term credit. Unregulated bridging loans – typically used for investment or business purposes – can run longer, say up to 24 months, depending on the lender.

Recent market data shows that bridging finance is booming. At the end of November 2025, the Bridging & Development Lenders Association (BDLA) reported that the total value of lender loan books had surged to £13.7 billion in the third quarter, significantly higher than the previous year’s £10.3 billion total.

What are the changes being made?

The FCA has confirmed that it intends to revisit the long‑standing 12‑month cap on regulated bridging loans. According to the Financial Reporter, the regulator used its Mortgage Rule Review Feedback Statement (FS25/6) to highlight strong industry support for updating the current rules.

As the FCA put it: “Most respondents supported extending the existing 12-month term for regulated bridging loans to reflect the timescales for building, buying and selling property and settling probate, all of which can take more than 12 months.”

This sentiment has been echoed by bridging loan lenders and industry bodies. In response to the Feedback Statement, Vic Jannels, CEO of the BDLA, said: “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."

What this means for regulated bridging loan borrowers

The FCA hasn’t yet confirmed what changes will be implemented, but the direction of travel suggests more flexibility is being seriously considered. Extending the maximum term could make regulated bridging loans more reflective of real‑world timelines, especially where delays are common and often unavoidable.

That said, new figures from the latest Bridging Trends report show that bridging finance transactions continue to move very quickly. The average completion time fell for the third year running in 2025, with loans completing in 43 days, down from 47 days in 2024 – the fastest pace recorded since 2017.

Bridging loans are typically fast by design, so for many borrowers who use them for short, time‑sensitive needs, any future extension to the maximum term may have little impact. But for those dealing with longer or more complex timelines, the FCA’s review could offer welcome breathing room.

Here’s how a potential extension to the 12‑month cap could offer meaningful benefits for some homeowners using regulated bridging loans:

More breathing room for home movers

Buying before selling is one of the most common uses of regulated bridging finance. A longer term could ease the pressure of aligning completion dates, particularly in slower markets or where chains are fragile.

Better support for complex personal situations

Regulated bridging loans may be useful during high‑pressure life events, such as divorce, downsizing, inheritance or urgent relocations. These situations rarely follow predictable timelines, so a longer term could reduce the risk of borrowers being penalised for delays outside their control.

Potential for borrowers to over‑stretch

Greater flexibility can be incredibly helpful, but longer-term limits may encourage some borrowers to take on projects or commitments that are more ambitious than their circumstances allow. Longer terms reduce time pressure, but borrowers will still need to provide a clear, realistic exit strategy.

Consumer protections remain central

While flexibility may increase, the FCA is unlikely to relax its stance on affordability, exit strategies or support for vulnerable customers. Any changes will be designed to help borrowers without blurring the line between short‑term bridging finance and long‑term mortgage products.

What this means for unregulated business and investor borrowers

For business borrowers and property investors, the FCA’s review is less directly impactful because unregulated bridging loans already allow longer terms of up to 24 months – potentially longer depending on the lender. However, changes to regulated products often influence the wider market. If regulated loans gain more flexibility, lenders may reassess how they structure unregulated products.

That said, most implications for business borrowers remain speculative until the FCA confirms its next steps. For now, the core features of unregulated bridging remain unchanged.

The bigger picture for borrowers

The bridging loan market has evolved significantly in recent years, with increasing demand and growing acceptance among both consumers and businesses. The FCA’s review of the 12‑month term limit reflects the evolution of this product – and acknowledges that real‑world borrowing needs don’t always fit neatly into a one‑year box. If the regulator introduces more flexible terms, borrowers could gain valuable breathing room.

As always with bridging finance, the key is clarity: a realistic exit strategy, a clear understanding of costs, and a lender who prioritises responsible lending. As the review progresses, borrowers should keep an eye on updates – and consider how potential changes might shape their future plans.

Sources

FCA confirms it intends to revisit the long‑standing 12‑month cap on regulated bridging loans. Financial Reporter: FCA to review 12-month term limit for regulated bridging loans. Date accessed: 16 February 2026.

Total value of lender loan books had surged to £13.7 billion in Q3 2025. Bridging & Development Lenders Association: Bridging market returns to growth in Q3. Date accessed: 16 February 2026.

Average bridging loans completion time was 43 days in 2025. Money Age: Bridging loans fall to lowest average completion time in eight years. Date accessed: 16 February 2026.