When Sarah first searched online for her next home, she kept seeing the phrase “What Is a Regulated Mortgage?” but did not fully understand its meaning. She knew she wanted clear advice, protection, and reassurance. Understanding mortgage regulation became the key to making the right decision.
A regulated mortgage is a home loan subject to rules set by the Financial Conduct Authority. These rules exist to protect borrowers and ensure advice is suitable, transparent, and fair.
What Is a Regulated Mortgage?
A regulated mortgage in the UK is a home loan taken by an individual and secured against a residential property. The property must be used, or intended to be used, as a home by the borrower or a close family member. At least 40 per cent of the property must be occupied as a dwelling.
Regulated mortgages are subject to the rules set by the Financial Conduct Authority. These rules exist to protect consumers and ensure mortgage advice is suitable, clear, and fair.
This type of mortgage differs from unregulated lending, which typically applies to business or investment borrowing.
Key Characteristics of a Regulated Mortgage
- Purpose: A regulated mortgage is used to buy or remortgage a home for personal residential use. This includes moving home, switching lenders, or borrowing against your main residence. You can learn more through our Residential Mortgage services.
- Borrower: The borrower must be an individual or a trustee. Limited companies and other corporate entities are not eligible for regulated residential mortgages.
- Property Use: At least 40 per cent of the property must be occupied by the borrower or a close family member. This includes properties used as a primary residence or as a family member’s residence.
- Security: The loan must be secured by a first legal charge on land in the UK. Timeshare properties are excluded.
- Regulation: Regulated mortgages are governed by the Financial Conduct Authority under the Financial Services and Markets Act 2000. This framework sets out how lenders and advisers must act.
What Makes a Mortgage Regulated
Consumer Protection
Regulation ensures lenders and advisers treat borrowers fairly. Advice must be suitable and affordable. Risks must be explained clearly before completion.
Ongoing Oversight
Rules apply to how the mortgage is arranged, managed, and administered. This includes interest rate changes, payment handling, and customer communication.
Defined Scope
Regulation applies to private residential borrowing. It does not usually apply to commercial finance or most investment lending.
Regulated and Unregulated Mortgage Examples
Regulated Mortgage Examples
A mortgage used to buy your main home.
A remortgage secured on your home for personal purposes.
A loan secured on a property where a close family member lives.
Borrowers with complex circumstances may still fall under regulation. This can include applicants with poor credit. In these cases, an Adverse Credit Mortgage may be suitable.
Unregulated Mortgage Examples
Mortgages taken by limited companies.
Buy-to-let mortgages where no family member lives in the property.
Loans that do not meet the 40 per cent residential occupancy requirement.
Some additional borrowing secured against a property may still be subject to regulation, depending on the use.
When Does Mortgage Regulation Apply
Mortgage regulation typically applies in the following situations:
- You are buying or remortgaging your main home
- A close family member will live in the property
- You are borrowing against your home for personal use
Buy-to-let mortgages are usually not regulated, unless they are classed as consumer buy-to-let. You can learn more about home finance options through our Residential Mortgage services.
Why Regulated Mortgages Matter to Borrowers
Regulation exists to protect borrowers from unsuitable lending. It ensures:
- Advice is based on your income and outgoings
- Risks are clearly explained before you proceed
- You receive documentation outlining your rights
- Complaint processes and protections are in place
This structure helps borrowers make informed decisions and reduces the risk of financial harm.
Regulated Advice and Specialist Situations
Some regulated mortgages involve more complex circumstances. This can include adverse credit, debt consolidation, or non-standard income. In these cases, working with an experienced broker is essential.
If you have credit challenges, regulated advice may include solutions such as an Adverse Credit Mortgage. If you already own a property, options such as second charge mortgages may also be subject to regulation depending on the use.
Getting Regulated Mortgage Advice
Regulated mortgage advice must be provided by authorised professionals. Connect Mortgages offers regulated advice tailored to your circumstances and explains each step clearly.
Your home may be repossessed if you do not keep up repayments on your mortgage or any loans secured on it.
The Connect Group and Trusted Advice
Connect Mortgages is part of the Connect Group. Connect Experts and Connect for intermediaries are trading divisions of Connect IFA Ltd.
If you are a mortgage adviser looking to grow your business, you can Join Our Mortgage Network. If you are a customer looking for trusted advice, you can “Find Mortgage Advisers” across the UK.
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