Not all mortgages are regulated. But if you’re dealing with UK property in 2025, chances are you’ll come across the term “regulated mortgage contract.” Whether you're a homeowner, investor, or broker, it’s vital to understand what counts as a regulated loan—and what doesn’t.

This guide breaks down the current rules, who they apply to, and the practical implications for borrowers and professionals alike.

What Is a Regulated Mortgage?

A regulated mortgage contract is a loan secured on a property where at least 40% of the property will be used as the borrower’s (or a family member’s) residence. These loans are regulated by the Financial Conduct Authority (FCA) to ensure consumer protection.

Key Criteria for Regulation in 2025

For a mortgage to be regulated, it must generally meet these three conditions:

1. The borrower is an individual (not a company).
2. The loan is secured on land in the UK.
3. At least 40% of the land will be used as or in connection with a dwelling by the borrower or their close family.

If any of these aren’t met, the mortgage is likely unregulated.

Common Regulated Mortgage Scenarios

• Residential Purchase: Buying a home to live in.
• Remortgage of Your Main Home: Even if it's to raise capital for other uses.
• Buy-to-Let for a Close Family Member: A so-called “consumer buy-to-let” where the property is let to children or relatives.
• Joint Borrower Sole Proprietor (JBSP): If one borrower lives in the property, the loan is typically regulated.

When Is a Mortgage Not Regulated?

• Limited Company Buy-to-Let: Even if the borrower is a director or shareholder.
• Commercial or Mixed-Use Property Loans: Unless over 40% of the space is the borrower’s residence.
• Bridging Loans on Investment-Only Property: If there’s no intent for residential use.
• Holiday Let Mortgages: Unless the property will be used as a main residence.
• Second Charge Loans on Unencumbered Buy-to-Let Properties: Where there's no owner-occupier usage.

Why Does Regulation Matter?

There are clear implications based on whether a mortgage is regulated or not:

🛡️ FCA Oversight

Regulated mortgages are subject to stricter rules around affordability, advice, disclosures, and complaints. That gives borrowers more protection.

⚙️ Process & Documentation

You’ll need to complete regulated advice processes, suitability reports, and follow the FCA's responsible lending rules.

💼 Broker Authorisation

Only brokers with the appropriate FCA permissions can advise on regulated loans. This is especially important for firms mixing regulated and unregulated activity.

💬 Clarity for Clients

Many clients don’t understand what “regulated” means in practice—until something goes wrong. A clear explanation up front helps build trust.

Mixed-Use Scenarios

It’s not always clear-cut. For example:

• Bridging loan on a property with a live-in renovation plan: This could be regulated.
• Refinance of a residential property with a lodger or part-time AirBnB use: Still likely regulated.
• A parent helping a child onto the ladder via JBSP: Definitely regulated.

When in doubt, assess how the property is actually used and who benefits from the loan.

Final Thought: The Risk of Misclassification

Misclassifying a regulated loan as unregulated (or vice versa) could invalidate compliance procedures and create FCA risk for brokers. For borrowers, it could lead to unsuitable lending outcomes.

At Willow Private Finance, we ensure that every loan is assessed correctly, protecting both you and your clients. Our understanding of the regulatory environment means smoother applications—and better outcomes.

📞 Want Help Navigating the Rules?

Book a free strategy call with one of our mortgage specialists.

We’ll help you structure your deal the right way—first time.