Bridging Loans

 

Buying and selling your home can be a complicated process. Sometimes, the timing just doesn’t line up. You may find your dream home before you’re ready to put your current home on the market. We can help take that pressure away by arranging a bridging loan for qualified clients, whereby the bank will help you finance the property you want to buy while you wait for your current property to sell.

Helping you Safely Buy and Sell Your Home

How do I know if a bridging loan is right for me?

A bridging loan is typically used where:

  1. You are buying a more expensive property than your current home, i.e. you are upgrading or upsizing
  2. You have purchased or about to purchase your new home, but have not yet listed it for sale yet – this may be due to timing or because you need to prepare it for sale e.g. renovations
  3. You meet other criteria such as having sufficient equity in your current home or cash set aside to afford the interest on the bridging loan
What are the costs of the bridging loan and how is it paid?

A bridging loan is a service provided by the bank, and as such incurs interest. This interest is paid for in one of two ways:

  1. As an interest only expense paid monthly during the bridging period
  2. As capitalised interest
What is the “peak debt”?

The peak debt refers to all the debt you will take on during the bridging period. It is typically quite high and consists of the bridging loan required PLUS the end debt remaining. During the bridging period interest must be maintained on both the bridging loan and the end debt.

What is the “end debt” or “residual debt”?

The end debt, or the “residual debt”, is the loan remaining after the bridging loan has been closed. You must be able to demonstrate that you can service the end debt for the bank to approve a bridging loan.

How long does a bridging loan last for?

A bridging loan usually lasts for a 6 to 12 month period. You may elect the term when making your application, and we typically recommend a longer term to give you enough time to sell your current home. It is in your best interest to close out a bridging loan as soon as possible to minimise the interest costs to you.

WHO TO TALK TO

Need professional advice on Bridging Loans?
These are experts to get in touch with.

Tommy Lim
Managing Director
Priscilla Tan
Operations Manager
Luke Xie
Finance Broker