Bridging Loan for Property Purchase Explained: The Complete Singapore Guide

A bridging loan is a short-term loan that helps you bridge the financial gap when buying a new property before selling your existing one. In Singapore's fast-paced property market, timing mismatches between property sales and purchases are common, and bridging loans provide a practical solution to avoid losing your dream property while waiting for sale proceeds.

This comprehensive guide explains everything Singapore property buyers and investors need to know about bridging loans—from how they work and eligibility requirements to interest rates, calculation methods, and whether they're the right choice for your situation. At Homejourney, we're committed to helping you make informed property decisions with transparent, verified information and trusted guidance.

What is a Bridging Loan?
How Bridging Loans Work in Singapore
Eligibility Requirements and Documents
How Much Can You Borrow?
Interest Rates and Loan Tenure
Types of Bridging Loans
Calculating Your Bridging Loan
Pros and Cons of Bridging Loans
Key Risks and How to Mitigate Them
Major Banks Offering Bridging Loans in Singapore
Decision Framework: Is a Bridging Loan Right for You?
Frequently Asked Questions
Next Steps with Homejourney

What is a Bridging Loan?

A bridging loan (also called a bridge loan or bridging finance) is a short-term financing solution designed specifically for property owners who are simultaneously selling one property and buying another. The loan bridges the monetary gap between these two transactions, allowing you to complete your property purchase without waiting for the sale proceeds of your existing property.

In Singapore's context, bridging loans are particularly valuable because property transactions often don't align perfectly. You might find an ideal property to purchase, but your current home hasn't sold yet. Without a bridging loan, you'd either lose the opportunity or need to find alternative financing. The bridging loan solves this timing problem by providing immediate funds for your new property purchase.

The key characteristic of a bridging loan is its short tenure—typically up to six months in Singapore. Once you receive the sale proceeds from your existing property, you use those funds to repay the bridging loan in full. This is why bridging loans are considered temporary financing solutions rather than long-term mortgages.

How Bridging Loans Work in Singapore

Understanding the mechanics of bridging loans helps you assess whether this financing option suits your property transaction timeline.

The Transaction Timeline

Here's how a typical bridging loan scenario unfolds:

Property Purchase Decision: You identify a property you want to buy and receive an Option to Purchase (OTP) from the seller.
Bridging Loan Application: You apply for a bridging loan from your bank, providing proof that you're selling your existing property.
Loan Approval: The bank approves your bridging loan based on your eligibility and the expected sale proceeds from your current property.
New Property Purchase: You use the bridging loan funds to pay the down payment and other transaction costs for your new property.
Existing Property Sale: While the bridging loan is active, you complete the sale of your existing property.
Loan Repayment: Once you receive the sale proceeds, you immediately repay the entire bridging loan amount.
Home Loan Continuation: Your regular home loan for the new property continues as normal.

The critical point is that bridging loans must be repaid within six months in Singapore. This regulatory requirement means your property sale must complete within this timeframe, or you'll face significant financial pressure.

Relationship with Your Home Loan

It's important to understand that a bridging loan works alongside your home loan, not instead of it. You'll typically take both simultaneously:

Home Loan: Finances the majority of your new property purchase (usually 75-85% of the purchase price)
Bridging Loan: Covers the down payment and transaction costs (typically 20% of the purchase price)
Your Cash: You contribute the remaining amount (usually 5-10%)

This structure means you're managing two loans during the bridging period, which increases your financial obligations temporarily. However, once your old property sells and you repay the bridging loan, you only have the home loan remaining.

Eligibility Requirements and Documents

Not everyone can apply for a bridging loan. Singapore banks have specific eligibility criteria to ensure borrowers can repay within the short tenure.

Who Can Apply?

To be eligible for a bridging loan in Singapore, you must meet these requirements:

Singapore Citizen or Permanent Resident: You must be a Singapore citizen, Permanent Resident, or in some cases, a foreigner with valid work permits (requirements vary by bank)
Minimum Age: You must be at least 21 years old
Active Property Sale: You must have proof that you're actively selling a property in Singapore
Good Credit Score: Banks assess your credit history to ensure you have a track record of timely loan repayments
Stable Income: You must demonstrate sufficient income to service both the bridging loan and your home loan simultaneously
Adequate Sale Proceeds: The expected sale proceeds from your existing property must be sufficient to fully repay the bridging loan within the six-month tenure

Documents Required

When applying for a bridging loan, prepare these essential documents:

Option to Purchase (OTP): The OTP for the new property you're buying, which proves your commitment to the purchase
Sale Agreement or Letter of Intent: Documentation showing your existing property is being sold
Identity Documents: NRIC (for Singapore citizens) or relevant identification for PRs and foreigners
Income Documents: Recent payslips (typically last 3 months), employment letter, and tax returns
CPF Statements: CPF withdrawal statements showing your savings and contributions
Bank Statements: Recent bank statements (typically last 3-6 months) showing your financial position
Outstanding Loan Statements: Details of all existing loans and their repayment status
Property Documents: Title deeds or HDB lease documents for both properties
Valuation Report: Professional valuation of the new property being purchased

The exact documents required may vary by bank, so it's worth checking with your chosen lender. At Homejourney, when you apply through our bank rates page, you can submit your application to multiple banks simultaneously, and each will specify their exact requirements.

How Much Can You Borrow?

The amount you can borrow through a bridging loan depends on several factors, primarily the Loan-to-Value (LTV) ratio and your property's purchase price.

Understanding LTV Limits

The Loan-to-Value (LTV) ratio is the percentage of a property's purchase price that you can borrow. In Singapore, these limits are set by the Monetary Authority of Singapore (MAS):

Private Property: Maximum LTV of 75% (meaning you need to cover 25% through down payment and bridging loan)
HDB Flat: Maximum LTV of 85% (meaning you need to cover 15% through down payment and bridging loan)

A bridging loan covers the portion you need beyond your home loan's LTV limit. Here's a practical example:

Example: Private Property Purchase

New property purchase price: $1,000,000
Home loan approval (75% LTV): $750,000
Remaining amount needed: $250,000
Bridging loan (covers 20% down payment): $200,000
Your cash contribution (5%): $50,000

In this scenario, you borrow $200,000 through the bridging loan to cover most of the down payment, while contributing $50,000 of your own funds.

Maximum Borrowing Amount

Most Singapore banks set a practical limit on bridging loans at approximately 20-25% of the new property's purchase price. While technically you could borrow up to 25%, financial advisors recommend limiting your bridging loan to around 20% because:

Higher Interest Rates: Bridging loans carry interest rates of 5-6% p.a., significantly higher than home loans
Short Repayment Period: You must repay within six months, creating substantial monthly obligations
Risk Management: If your property sale delays, you'll struggle to service both loans

The actual amount you can borrow also depends on:

Your Income: Banks assess your monthly income to ensure you can service both loans
Existing Debts: Your current loan obligations reduce your borrowing capacity
Sale Proceeds Certainty: Banks want confidence that your property sale will complete and generate sufficient proceeds
Property Value: The valuation of your new property affects the LTV calculation

Calculate Your Borrowing Capacity

To understand how much you can borrow, use Homejourney's mortgage eligibility calculator, which instantly shows your borrowing power based on your income, existing debts, and property value. The calculator helps you determine:

Maximum home loan amount
Potential bridging loan amount
Total monthly loan obligations
Your cash contribution requirement

Interest Rates and Loan Tenure

Interest rates and tenure are critical factors affecting the total cost of your bridging loan.

Current Interest Rates

Bridging loan interest rates in Singapore are significantly higher than standard home loans. As of early 2026, typical rates range from 4% to 6% per annum, depending on the bank and market conditions.

Here's how bridging loan rates compare to home loan rates:

Loan Type	Typical Interest Rate	Tenure	Purpose
Home Loan (SORA)	3.5% - 4.5% p.a.	25-30 years	Long-term property financing
Bridging Loan	4% - 6% p.a.	Up to 6 months	Short-term cash flow solution

The higher bridging loan rates reflect the increased risk banks take on short-term, unsecured lending. Because you're relying on property sale proceeds to repay, banks charge a premium for this risk.

Interest Rate Structure

Different banks offer bridging loans with different rate structures:

Fixed Rate: A set interest rate for the entire loan tenure (e.g., 5.25% p.a.)
SIBOR-Based: Rate tied to Singapore Interbank Offered Rate plus a margin (e.g., 3M SIBOR + 2%)
Prime Rate-Based: Rate linked to the bank's prime lending rate (e.g., Prime Rate + margin)

SIBOR-based rates can be advantageous if interest rates decline during your bridging period, but they carry upside risk if rates rise.

Loan Tenure

All bridging loans in Singapore have a maximum tenure of six months. This regulatory requirement is crucial because:

It creates urgency to complete your property sale
It limits your total interest cost (shorter tenure = less interest paid)
It forces you to plan your transaction timeline carefully

Your actual tenure might be shorter than six months if your property sells faster. In that case, you repay the loan immediately upon receiving sale proceeds, and your interest cost is proportionally lower.

Capitalized Interest Option

Some banks offer capitalized interest on bridging loans, meaning you don't pay interest monthly. Instead, the interest accrues and is added to the loan amount, which you repay in full when the property sells. This can ease your monthly cash flow during the bridging period, though it increases the total repayment amount.