What is a Bridging Loan for Property Purchase?
A bridging loan is a short-term financing solution designed to help Singapore property buyers and upgraders cover the financial gap between purchasing a new property and receiving proceeds from selling their existing one.[1] Rather than waiting months for your current home to sell, a bridging loan provides immediate access to funds, allowing you to commit to your new property purchase without delay.
In Singapore's competitive property market, timing is everything. If you've found your ideal home but haven't yet sold your current property, a bridging loan bridges that crucial gap—typically for a maximum of 6 months.[2] This temporary financing solution is particularly valuable for upgraders moving from HDB flats to private properties, or those downsizing to release equity.
The maximum amount you can borrow typically ranges from 20-25% of your new property's purchase price, depending on your bank and the net proceeds expected from your existing property sale.[1][3] Unlike traditional home loans that assess your personal income, bridging loans are asset-backed, relying on your property's value and expected sale proceeds.[8]
How Bridging Loans Work in Singapore
Understanding the mechanics of bridging loans helps you determine if this financing option suits your property journey. The process involves several key stages:
The Basic Timeline
You apply for a bridging loan while your current property is on the market or under offer. Once approved, funds are disbursed to help you complete the purchase of your new property.[1] You then have up to 6 months to sell your existing property and repay the bridging loan using the sale proceeds.[2] If your sale completes early, you can repay the loan immediately without penalty.
Two Repayment Structures
Singapore banks offer two main bridging loan repayment options, each with different cash flow implications:
- Capitalised Interest Model: You make no monthly payments during the loan tenure. Instead, interest accumulates and is added to the final loan amount, repaid entirely when your property sells.[1] This minimises your immediate financial burden if you're managing two property transactions simultaneously.
- Simultaneous Repayment Model: You make monthly payments on both your bridging loan and your new home loan concurrently.[1] While this requires higher monthly outgoings, it reduces total interest paid over the loan period, making it more cost-effective long-term if you can afford the payments.
Your choice depends on your cash flow situation. If you're stretched financially during the transition, capitalised interest provides breathing room. If you can manage dual repayments, simultaneous repayment saves money overall.
Key Benefits of Bridging Loans for Singapore Property Buyers
1. Lower Loan-to-Value (LTV) Ratio
One of the most significant advantages is strategic LTV reduction. For example, if you qualify for a 75% LTV on a $1 million new property, your bank loan covers $750,000. A bridging loan of $200,000 covers your 20% non-cash downpayment, reducing the amount you need to borrow on your main home loan.[2] A lower LTV typically qualifies you for better interest rates, potentially saving tens of thousands over your mortgage tenure.
2. Competitive Advantage in Hot Markets
Singapore's property market moves quickly. Bridging loans enable you to make firm offers on new properties without conditioning the sale on your existing property selling first. This removes a major contingency that deters sellers, especially in competitive developments or sought-after locations.
3. Flexibility in Timing
You're not forced to accept the first offer on your current property just to fund your new purchase. With bridging finance in place, you can negotiate better terms and pricing for both transactions, maximising your equity release.
4. Covers Transaction Costs
Beyond downpayments, bridging loans can cover legal fees, stamp duties, and other property transaction expenses.[3] This comprehensive coverage simplifies your cash flow management during the transition.
Bridging Loan Eligibility and Requirements in Singapore
Who Can Apply?
To qualify for a bridging loan in Singapore, you must be a Singapore Citizen or Permanent Resident aged 21 or above, with proof that your existing property is actively being sold.[2] Most banks require evidence of a signed Sales and Purchase Agreement or at minimum, a confirmed listing with your property agent.
Essential Documentation Checklist
Prepare these documents before approaching your bank or using Homejourney's application platform:
- Proof of sale of existing property (S&P Agreement or Letter of Intent)
- Purchase agreement or Letter of Offer for new property
- Recent property valuation or appraisal of your existing home
- Latest 3-6 months of bank statements
- Proof of income (payslips, tax returns, or CPF statements)
- NRIC and proof of address
- Details of your existing mortgage (if any)
- CPF statement showing available balance
Having these documents ready accelerates the approval process significantly, especially when applying through Homejourney's streamlined platform.
Loan Amount Limits
Banks typically cap bridging loans at 20-25% of your new property's purchase price.[3][4][5] The actual amount depends on the net proceeds expected from your existing property sale. If your current home is valued at $800,000 with an outstanding mortgage of $400,000, your available equity is $400,000—this sets your maximum borrowing limit for the bridging loan.
Understanding Bridging Loan Costs
Interest Rates
Bridging loan interest rates in Singapore typically range from 4-6% per annum, varying by bank and market conditions.[2][3] Standard Chartered charges 3-month SIBOR plus 2% annually, while UOB offers fixed rates between 4-5%.[2] These rates are higher than standard home loans because bridging loans carry greater risk—they're short-term, unsecured by the new property, and dependent on your ability to sell your existing home.
To compare current rates from DBS, OCBC, UOB, HSBC, Standard Chartered, and other major banks offering bridging loans, use Bank Rates to see real-time offerings and calculate your exact costs.
Total Cost Calculation
Let's calculate a practical example. If you borrow $200,000 at 5% per annum with capitalised interest for 6 months:
- Interest accrued: $200,000 × 5% × 0.5 years = $5,000
- Total repayment: $205,000
If you choose simultaneous repayment instead, your monthly payment would be approximately $3,333 (principal + interest), reducing total interest to roughly $2,500-3,000 depending on your repayment schedule. This demonstrates why simultaneous repayment often makes financial sense despite higher monthly outgoings.
Additional Fees
Beyond interest, expect processing fees (typically $500-1,500), valuation fees ($300-600), and legal fees ($800-1,500). Budget for these upfront costs when evaluating whether a bridging loan makes financial sense for your situation.
Why Apply for Bridging Loans via Homejourney?
Navigating Singapore's bridging loan landscape involves comparing offers across multiple banks, each with different rates, terms, and approval criteria. Homejourney simplifies this process while prioritising your safety and financial wellbeing.
Multi-Bank Comparison in One Place
Rather than visiting individual bank branches or websites, Homejourney's Bank Rates platform displays current bridging loan rates and terms from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, and other major lenders. You see real-time offerings, compare terms side-by-side, and understand exactly what each bank will charge before committing to anything.
