A bridging loan acts as a temporary financial bridge to help you deal with your financial needs. You can use it to maintain a steady flow of cash even when your money is tied up elsewhere.
If you have never considered it, you may want to embrace it as an option if you are looking for a temporary financial solution.
A bridging loan in Singapore is often used by homeowners who want to downgrade existing homes or upgrade to a new home but don’t have enough cash flow. You can also use it to move into a new home of a similar size in a more desirable location.
The most common bridging loan Singapore financial institutions offer is the kind that people use to purchase residential property.
The typical repayment bridging loan period usually lasts until the sales of property’s completion date, subject to the terms and conditions of the agreement.
If you need to go into debt to close real estate deals, you should consider a bridge loan. Here are three main reasons why it can work for your needs:
- It can help you take advantage of a new potentially-profitable deal even when your cash is pending or tied up in an old property.
- It helps you access immediate cash flow during that waiting period. Once your sales proceeds from your existing property come in, you can then pay off the entire debt.
- Since financial institutions are willing to advance you a bridging loan to temporarily boost your cash flow, you don’t have to price your asset lower than it’s real worth just because you feel the financial pressure. You can take the time to find the right buyer.
At least 18 years old
No minimum salary required
Exercised the option to purchase (OTP)
Identify card / NRIC
Proof of residence (utility bill, a letter addressed to you and/or tenancy agreement)
Proof of employment (certificate of emloyment or recent 3 months payslip)
SingPass ( to log into CPF, HDB, IRAS website)
Copy of the "Option To Purchase" (OTP)
How Can We Help You?
We are an online directory that offers information about the licensed money lenders that provide bridging loans. Here’s how we can help you:
Reduce research time - We will provide neutral information about licensed moneylenders that offer these products. All the information is in one place thus reducing your research time.
Customize loan offer - Our unbiased product comparison about Singapore bridging loan products enable you to make the best decision based on your financial needs. And since ours is a list of only licensed moneylenders, you can be sure you will be getting access to regulated lenders who won’t pressure you.
Find your perfect match - Since we also offer a matching service that avails 3 quotes to potential borrowers, we cut down the research time even further. Additionally, we match you with the most affordable products for your needs.
How to Apply for a Bridging Loan?
While different moneylenders do business in different ways, there are common actions they all take or require from you. Here are the basic steps you may need to follow:
1. Submit Loan Enquiry to Instant Loan
Tell us about your desired amount, monthly income, and desired interest rate and submit the form.
2. Compare up to 3 Loan Offers
We’ll provide you with upto 3 competitive bridging loan quotes for free that would be ideal for your needs.
3. Visit the Recommended Loan Provider
Head on to the most trustworthy lender you chose and apply online. You can visit the provider to finally sign your bridging loan application.
How Fast Can I Get My Bridging Loan Approved?
How fast you get approval depends on the moneylender you choose. That’s why you must find the right fit especially if you need the loan in a hurry.
Generally, most moneylenders will approve your loan within an hour. Banks, on the other hand, may take more time, usually a few weeks.
How Much Can I Borrow From Bridging Loan?
Many loan providers are in a position to provide a bridging loan that is in the low six figures. What bridging loan amount you end up with, however, depends on many things. The bridging loan amount depends on your financial needs, the interest rates, the value of your assets, the product type, the value of your new property, etc.
For banks, typically you can borrow about 15% to 25% of your home value. For moneylenders, you can loan up to 6 times of your monthly salary if your annual income is above $20,000.
What is The Interest Rate On Bridging Loans?
You can expect about 5% to 6% per annum as interest rate for banks. Moneylenders, meanwhile, offer loans with interest rates up to 4% per month.
Things to Know Before Getting a Bridging Loan
You need to know a few things before getting a bridging loan. It may help you avoid making mistakes.
Your Property as Collateral
Banks usually require collateral or property as security for your loan repayment. It is then important for you to be sure that you have the capacity to pay the loan on time.
Moneylenders, on the other hand, approve the bridging loan only after you have found the buyer for your property and exercised the Option to Purchase (OTP).
An OTP is an agreement between the buyer and seller of a property and is the proof for moneylenders that both parties enter into a contract for the sale and purchase of the property.
Proper Property Valuation
Before applying for a bridging loan, the rule of thumb is you have to know the value of your property and do not overestimate or miscalculate its value to avoid issues.
The best way to ensure you get an indicative price of your property is to get three different valuation quotes and consider the majority price.
What are the consequences if something goes wrong in the sale of your old house?
If something goes wrong with the sale of your old house, you may not be able to pay off your debts. The result: you’ll owe more money due to penalties and interest charges, and worse lower your credit score.
Is it the cheapest bridging loan on the market?
It’s difficult to know if you are getting the cheapest bridging loans on the market. Loan providers offer varying products of this kind and their terms vary from one borrower to another.
A good loan comparison tool will enable you to find the most affordable bridging loan on the market. But also, it should give you access to bridging loans with the best repayment terms possible even if they are not the cheapest in the market.
How much more are you ultimately paying, after factoring in the bridging loan?
After factoring in the bridging loan, the total debt you are expected to pay should be fair. Where possible, it should be an amount equal to or less than the profit from sales proceeds of your home.
What are the repayment terms and fees?
Always learn the repayment terms and fees before signing on the dotted line. This should be inclusive of the administrative fees and total interest.
Also, ask about the late payment fees, and what steps lenders will take if you default. The repayment period, and how flexible the repayment schedule will be, also matters.
Do you have more questions about bridge loans? Here are Frequently Asked Questions (FAQs) and answers you can use to base your decision on:
Bridging loans are typically more expensive to take than a home loan. That’s because they are short-term and carry a higher risk.
Banks can lend you up to 25% of the purchase price of the new property, given that you'll have enough profit from the sale proceeds of your old property.
For moneylenders’ unsecured loans, if your annual income is less than $20,000, you can only take bridging loans up to $3,000. If your yearly salary is $20,000 and above, you would be able to loan up to 6 months worth of your income.
Typically, moneylenders will refer to the profit of the sales proceeds to determine the amount of your loan.
Different loan providers have different risk appetites. Usually, applicants with a bad credit score will be assessed based on their credit report from Credit Bureau Singapore.
Most of the time, bank applicants with a poor credit history or undischarged bankruptcy will be denied. Moneylenders, on the other hand, refer to the sales proceeds of the property to assess whether you qualify for the loan or not.