How Much Is A Bridging Loan In Singapore?

 

Bridging loans are fast becoming a popular financing solution in Singapore, particularly among persons looking to purchase a new property.

The best way to understand bridging loans is to think of it as an intermediary between the two transactions.

Maybe you want to buy a new house and you want to sell your current house to finance it. This means you may not buy the new house until you receive proceeds from the sale of your current house.

However, a bridging loan offers you a much better option.

It provides the necessary funding to secure the new property while waiting for the sale of the existing one to be completed.

A bridging loan allows you to secure the new property with a deposit while giving you the time to sell your current home.

After selling your current home, you can use the proceeds to pay off the bridging loan.

The question most people ask is, how much is a bridging loan? And that’s what this article talks about.

The cost of bridging loans in Singapore can vary depending on the lender, the amount, and the loan length.

Some lenders may charge higher interest rates for bridging loans, which are considered higher risk than traditional loans.

Additionally, some lenders may charge additional fees for services such as appraisal or legal fees.

So it would help to shop around and compare different lenders and their terms before settling for a bridging loan offer.

With this in mind, the article will now proceed to answer the questions, “how much is a bridging loan in Singapore?”, “am I eligible?”, “where can I get the best bridging loans” and so on.

What Is A Bridging Loan?

A bridging loan is a short-term loan you can take out to secure a new property while giving you the time to sell your current home. It is commonly used when a person needs to sell their current home to buy a new one.

A good example is when a business owner wants to acquire a new property to expand his business but can’t until he sells his current property.

He may opt for a bridging loan to acquire the new property and then pay off the loan after selling his current property.

These loans are usually short-term, usually up to 12 months and the interest rates are typically higher than traditional mortgages, mainly because of the higher risk for the lender.

This brings us to the question – how much is a bridging loan?

How Much Is A Bridging Loan?

Now that you know what a bridging loan is, the pertinent question is: how much is a bridging loan in Singapore?

First, please keep in mind that the amount of a bridging loan in Singapore varies depending on several factors.

These factors include the lender, the value of the property being used as collateral, and the borrower’s creditworthiness.

In general, most lenders in Singapore will provide bridging loans of up to 80% of the property’s value.

For example, if the property being used as collateral is valued at $1 million, a borrower may be able to borrow up to $800,000.

A bridging loan interest rate in Singapore can vary between 1.5-2% per month, which is relatively high compared to traditional mortgages. The loan term may be up to 12 months.

It’s worth noting that taking a bridging loan can be a high-risk move as the interest rate is high and the term is short. Therefore, it’s essential to have a clear plan on how to repay the loan on time.

This will provide the needed vanswers to the question, ”how much is a bridging loan in Singapore?”.

How To Apply For A Bridging Loan

After asking “how much is a bridging loan in Singapore?”, the next pertinent question is “how can I apply for a loan?”.

To apply for a bridging loan in Singapore, you need to follow these steps:

  1. Determine your loan amount and purpose: Before applying for a loan, you should clearly understand how much money you need to borrow and what the loan will be used for.
  2. Gather required documents: You must provide various documents to support your loan application. This may include proof of income, property ownership, bank statements, and other financial documents.
  3. Shop around for the best rates: Research different lenders and compare interest rates, fees, and loan terms to find the best loan for your needs.
  4. Submit your application: Once you’ve gathered the necessary documents and found a lender that you’re comfortable with, you can submit your loan application.
  5. Wait for approval: The lender will review your application and assess your creditworthiness. If you’re approved, the lender will provide you with a loan agreement outlining the loan terms and conditions.
  6. Close the loan: After you review and sign the loan agreement, the lender will disburse the loan funds to you.

Note that you need a property as collateral to obtain a bridging loan in Singapore, and the lender will check your credit score to evaluate your lending risk.

If you’re already wondering if your credit score is enough to get you a bridging loan, check in with us at Katong Credit. We’re happy to offer a bridging loan that matches your finances.

What To Know Before Getting A Bridging Loan In Singapore

Before applying for a bridging loan in Singapore in Singapore, there are certain factors to keep in mind. These include:

  1. Collateral: Bridging loans in Singapore are typically secured against the existing property, so you must have a property you can use as collateral.
  2. Creditworthiness: Lenders will assess your creditworthiness to determine your ability to repay the loan.
  3. Interest rate: Bridging loans generally have higher interest rates than traditional mortgages, so it’s essential to consider the cost of borrowing.
  4. Repayment plan: Since the term of a bridging loan is usually short, it’s crucial to have a clear plan on how to repay them promptly.
  5. Fees: Be sure to review and understand all the fees associated with the loan, such as the application fee, appraisal fee, and any other applicable charges.
  6. Alternatives: Consider alternatives such as a personal or term loan, before opting for a bridging loan. Seek discounts and promotional offers at any financial instututions you’re prospecting.
  7. Compare offers: Research different lenders and compare interest rates, fees, and loan terms to find the best loan for your needs.
  8. Seek professional advice: Before making any financial decisions, it would help to seek the advice of a financial advisor or a lawyer to ensure that you are making the best decision for your situation.

By taking the time to consider these factors, you can make an informed decision about whether a bridging loan is a suitable choice for you.

If you’re still wondering and asking “how much is a bridging loan from licensed money lenders”, then head over to Katong Credit to get a customised loan offer for you.

How To Use A Bridging Loan To Lower Your LTV Ratio

A loan-to-value (LTV) ratio measures the amount of a loan compared to the value of the property that serves as collateral.

A lower LTV ratio generally means that the borrower has more equity in the property, which can make it easier to qualify for a loan and may result in a lower interest rate.

A bridging loan can be used to lower an LTV ratio in various ways. These include:

  1. Using a bridging loan to make a down payment: By using a bridging loan to make a down payment on a property, you can decrease your LTV ratio and increase your equity in the property.
  2. Using a bridging loan to pay off existing debt: If you have existing debt on a property, you can use a bridging loan to pay off that debt and decrease your LTV ratio.
  3. Using a bridging loan to renovate or make repairs: By making repairs or renovations to a property, you can increase its value and decrease your LTV ratio.

It’s essential to remember that the LTV ratio is a measure lenders use to evaluate risk.

Therefore, using a bridging loan to lower your LTV ratio can make it easier to qualify for loans and may result in a lower interest rate. S

Please keep in mind that bridging loans should be used carefully and with the guidance of a financial advisor.

Capitalized Interest Bridging Loan Vs Simultaneous Repayment Bridging Loans

Capitalized interest bridging loans and simultaneous repayment bridging loans are two types of bridging loans that serve different purposes.

A capitalized interest bridging loan is a loan that allows the borrower to defer the payment of interest until the loan is repaid. The interest is added to the loan balance and then paid off at the end of the loan term.

This type of loan is useful for borrowers who expect to have the funds to repay the loan promptly but need extra time to gather the funds.

A simultaneous repayment bridging loan, also known as a “roll-up” loan, is a loan that requires the borrower to make interest payments throughout the loan term.

The interest is paid along with the loan principal, usually monthly. This type of loan works best for borrowers with a stable income and who can afford to make regular payments.

When choosing between these two types of bridging loans, it’s essential to consider your current financial situation and ability to repay the loan on time.

If you expect to have the funds to repay the loan in the near future, a capitalized interest-bridging loan may be a good option.

However, if you have a stable income and can afford regular payments, a simultaneous repayment bridging loan may be a better option.

It is vital to remember that the interest rate can be higher on the capitalized interest loan, and the loan term is usually shorter than a simultaneous repayment loan.

Get Your Dream House With a Bridging Loan

Katong Credit offers fast and efficent bridging loan offers customised to suit your financial situation.

Don’t hold back on your plan to buy that dream house.

Apply for a loan or contact us today.

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