Bridging Loans in Singapore: What They Are, What They Cost, and When You Need One

If you are selling one property and buying another, you ideally complete the sale before you need the funds for the new purchase. In practice, timing does not always work out that neatly. A bridging loan is the solution when it does not.

What a Bridging Loan Is

A bridging loan is a short-term loan that bridges the gap between needing funds for your new property purchase and receiving the proceeds from your existing property sale.

In Singapore, bridging loans are offered by banks and licensed moneylenders. Most property transactions use bank bridging loans.

The loan amount is typically based on the net expected proceeds from your property sale (sale price minus outstanding mortgage and CPF refund), and it is meant to be repaid as soon as those proceeds are received.

When You Need a Bridging Loan

The most common scenario: you are upgrading from HDB to private condo, or from one condo to another. The completion date on your new purchase falls before the completion date on your existing property sale, leaving a gap where you need funds you have not yet received.

Typical completion timeline for a resale HDB or private property is eight to twelve weeks from OTP exercise. If both transactions are running in parallel and the dates do not align perfectly, a bridging loan covers the shortfall.

Bridging loans are also used when buyers exercise the OTP on their new property before listing their existing one, or when the existing property sale takes longer than expected.

What They Cost

Bridging loans in Singapore are relatively expensive compared to standard home loans. Interest rates typically range from 5% to 8% per annum, depending on the bank and the risk profile of the borrower.

Because they are short-term (usually three to six months), the total dollar cost is manageable. A $200,000 bridging loan at 6% per annum for three months costs approximately $3,000 in interest.

There may also be administrative fees and legal fees. Always confirm the total cost with the bank before committing.

What You Need to Qualify

Banks require documentation that the bridging loan will be repaid from the property sale proceeds. This includes the signed Option to Purchase for the property being sold, the sale and purchase agreement if available, and evidence that completion is proceeding.

The bridging loan amount is typically capped at the net expected proceeds from the sale, and the bank will want to confirm that the existing property sale is likely to complete within the bridging period.

Alternatives to Consider

The cleanest way to avoid a bridging loan is to sell first, then buy. Sell your existing property, receive the proceeds, and use those to fund your new purchase with a clean transaction. This eliminates the timing risk but may mean a period of temporary accommodation between sale and new purchase completion.

Some buyers negotiate a longer completion period on the new property purchase to allow their sale to complete first. This is sometimes possible with motivated sellers.

Frequently Asked Questions

How long does a bridging loan in Singapore last?

Most bridging loans in Singapore have a term of three to six months. The expectation is that the loan is repaid from the sale proceeds of the existing property within this period. Some banks allow extensions in circumstances where the sale is delayed, though this may come with additional fees.

Can I take a bridging loan and a regular home loan at the same time?

Yes. Bridging loans are typically taken alongside the long-term mortgage for the new property. Both are secured against the new property or the sale proceeds of the existing one. However, the combined debt servicing burden is counted under TDSR, so you need to confirm your TDSR position covers both.

Is there CPF involved in a bridging loan?

Not directly. Bridging loans are cash loans. However, the CPF refund from your existing property sale forms part of the net proceeds that repay the bridging loan. Your lawyer coordinates the CPF refund and the bridging loan repayment as part of the completion process.

What happens if my existing property sale falls through and I cannot repay the bridging loan?

This is the main risk of a bridging loan. If the sale does not complete as expected, the bridging loan remains outstanding and you continue to accrue interest. Most banks require evidence of a signed OTP before granting the bridging loan to mitigate this risk. If the sale falls through, you will need to discuss options with the bank promptly.

Do HDB sellers need bridging loans?

Sometimes. HDB resale transactions typically take 8 to 12 weeks to complete after the OTP is signed. If you are buying a private property with a shorter completion timeline while waiting for your HDB sale to complete, a bridging loan may be needed to cover the gap. The HDB resale process involves HDB's processing timelines which can affect your planning.

Worried About Timing Your Sale and Purchase?

Serene regularly helps clients plan the sequence of their sale and purchase to minimise or eliminate the need for a bridging loan. A session can map out your specific timeline and options.

Book a planning session with Serene