Key Facts About Bridging Loans You Should Know

Relocating to a new house requires a lot of management, such as unpacking, renovations, as well as purchasing new furniture. However, relocating can become much more difficult if you are short on cash after purchasing your new house and paying for the renovation.

While you will be able to obtain cash from selling your previous house, it might take a while for that money to be credited to you. Hence, by applying for a bridging loan in Singapore, you can ensure that you have the funds you need to fund pressing needs in the interim.

Here are a few key facts you need to know about bridging loans in Singapore.

What is a bridging loan?

A bridging loan provides you with financial assistance in the time frame after you have sold your previous home, and after purchasing a new property. These financial products are designed in a way to cover your costs until you have received the appropriate funds from selling your previous house.

Thus, the repayment period is usually shorter than other types of instant cash loans and ranges between 6 to 12 months.

What are the characteristics of a bridging loan?

To apply for a bridging loan, you will have to produce some proof that you will be receiving cash from a source in the near future. For example, in the case of home purchase, you can provide your Option to Purchase record to your preferred licensed moneylender in Singapore. This document acts as an agreement, verifying that you have acquired the exclusive permission of purchasing the property.

Banks providing home loans may also offer bridging loans at an interest rate of 5-6% per annum. You also have the option of only paying the interest rates during the tenure of the loan, and repaying the principal after receiving the sales amount from your previous house.

What are the types of bridging loans available in Singapore?

If you have decided to obtain a bridging loan, here are some of the options that are available to you:

1. Capitalised interest bridging loan

With this loan, the bank will take charge of financing the full amount of your new property. You will start repaying once you have received all of the funds that are associated with your previous house. However, interest rates will begin accruing over the entire loan tenure of the bridging loan.

After your previous house has been sold, you will have to repay the entire amount to the bank, along with the interest rates generated over that period. As there is no fixed repayment deadline that you will have to abide by, this bridging loan charges a high-interest rate.

2. Simultaneous repayment bridging loan

With this loan, you will make simultaneous payments to finance the bridging loan as well as your new house. The bank will provide you with a maximum time frame of a year, during which you will have to complete all of your repayments.


If you can produce all of the requisite documents to the bank upfront, your bridging loan might get approved within a day. Before starting the application process, you should check for any prepayment penalties as well as the loan tenure to make the most of your bridging loan.