What is a bridging loan and when would I need one?
A bridging loan is a short-term facility that covers the gap between purchasing a new property and receiving sale proceeds from your existing one. In Singapore, most major banks offer bridging loans for up to six months, with interest rates typically ranging from 5% to 6% per annum. You would need one when your new property's downpayment is due before your existing property's sale is completed.
Last updated: 22 Apr 2026
A bridging loan is a short-term financing facility that helps homeowners bridge the gap between purchasing a new property and receiving the proceeds from selling their existing one. It is designed for situations where the purchase completion date falls before the sale completion date.
In Singapore, bridging loans are offered by most major banks and are typically available for a tenure of up to six months, though some banks offer terms of up to twelve months. The loan amount covers the shortfall between the new property's downpayment and any available funds, up to a maximum determined by the expected net sale proceeds of the existing property.
The typical scenario works as follows: you find and commit to purchasing a new home while your existing property is still on the market or awaiting completion of sale. The downpayment and purchase costs for the new property are due, but your funds are tied up in your existing home. A bridging loan provides the temporary cash needed to complete the new purchase without waiting for the sale proceeds.
Bridging loan interest rates are higher than standard mortgage rates, reflecting the short-term and higher-risk nature of the facility. Rates typically range from 5% to 6% per annum. Banks structure repayment in one of two ways: a capitalised interest structure, where interest accumulates and is repaid in full together with the principal once the sale proceeds are received; or a simultaneous repayment structure, where you service the interest monthly while the loan is outstanding. Some banks also offer an overdraft structure, where interest accrues only on the amount drawn down.
Bridging loans are useful but should be approached with caution. If your existing property takes longer to sell than anticipated, interest costs accumulate and extensions may be difficult or expensive to obtain. In a worst-case scenario, if the existing property cannot be sold at the expected price, you may face a shortfall.
To minimise risk, try to secure a buyer for your existing property before committing to the new purchase, or negotiate a longer completion period for the new property. Ensure you have a realistic valuation of your existing property and a backup plan if the sale is delayed.
Cashew can advise on whether a bridging loan is necessary for your transition plan and help you compare terms across banks offering this facility.