Answer
Property Bridging Loan — How It Works, Costs & When You Need One
A bridging loan covers the gap between buying your new property and selling your old one. It's expensive money — here's the full cost breakdown so you can decide if it's worth it.
Answer: Bridging loans charge 5–6% p.a. interest with a typical 6-month term. A $500K bridge for 6 months costs $18K–$22K (interest + fees). Monthly interest alone: ~$2,300/mo. Alternative: sell first, rent for 3–6 months at $2K–$4K/mo ($6K–$24K total) — usually cheaper. Only bridge if you can't align sale and purchase timing and have reserves to cover 3–6 months of double carrying costs.
Bridging Loan Cost by Amount & Duration
At 5.5% p.a. interest rate
| Bridge Amount | 3 Months | 6 Months | 9 Months |
|---|---|---|---|
| $200,000 | $2,750 | $5,500 | $8,250 |
| $300,000 | $4,125 | $8,250 | $12,375 |
| $500,000 | $6,875 | $13,750 | $20,625 |
| $800,000 | $11,000 | $22,000 | $33,000 |
Interest only. Add $4K–$7.5K for processing fee, legal fees, and valuation.
Bridging Loan vs Sell-First-and-Rent
| Factor | Bridging Loan ($500K, 6mo) | Sell First + Rent (6mo) |
|---|---|---|
| Total cost | $18K–$22K | $12K–$24K rent |
| Monthly outflow | $2,300 bridge + $3K–$5K new mortgage | $2K–$4K rent only |
| Risk | Sale delay, price drop, double carry | Moving twice, short lease |
| Convenience | Move once, but financial stress | Two moves, but financially safer |
Bridging Loan Timeline
Before applying
Get your old property listed and ideally under contract before exercising OTP on the new one. The shorter the bridge period, the less you pay. A property already under OTP significantly de-risks the bridge for the bank — you may get a better rate.
During the bridge
Interest accrues daily. If your CPF refund arrives before the sale completes, use it to partially repay the bridge and reduce interest. Push your lawyer to expedite the old property sale completion. Every week saved = ~$530 less interest on a $500K bridge.
Repayment
Once your old property sale completes, the lawyer disburses sale proceeds to repay the bridging loan in full. Any surplus goes to your bank account. No early repayment penalty on most bridging loans — always confirm this in the offer letter.
Plan your upgrade finances
Calculate your expected sale proceeds and how much bridge you'd actually need.
FAQ
How does a bridging loan work day by day?
A bridging loan covers the gap between buying your new property and receiving sale proceeds from your old one. Here's the typical timeline: Day 1 — you exercise OTP on new property. Down payment due (25% for condo, 10% for HDB with HDB loan). Day 14 — stamp duty due on new property. Day 30–60 — your old property sale hasn't completed yet. You need cash for the new purchase but your money is locked in the old property. Day 30–60: bridging loan disburses. Bank lends you up to the expected net sale proceeds of your old property. Month 2–6 — you're paying interest on the bridging loan (5–6% p.a.). Month 3–6 — your old property sale completes. Sale proceeds arrive. Bridging loan is fully repaid from these proceeds. The loan exists purely to bridge the timing gap. It's short-term (6 months typical, extendable to 12), interest-only, and repaid in one lump sum from your sale.
What does a $500K bridging loan actually cost?
On a $500K bridging loan at 5.5% p.a. for 6 months: monthly interest = $500,000 × 5.5% ÷ 12 = $2,292/mo. Total interest over 6 months: $13,750. Processing fee: 0.5–1% of loan amount = $2,500–$5,000. Legal fees for the bridging loan: $1,500–$2,500. Valuation fee: $300–$500 (if not already done). Total cost for 6 months: $18,050–$21,750. If you only need the bridge for 3 months (faster sale completion): $6,875 interest + $2,500–$5,000 processing + $1,500–$2,500 legal = $10,875–$14,375 total. If it stretches to 9 months: $20,625 interest + fees = $24,625–$28,625. Every month the bridge stays open costs you ~$2,300 in interest. This is why speed of sale matters — list your old property early.
What interest rates do bridging loans charge in 2026?
Bridging loan rates in Singapore typically range from 5–6% p.a. in 2026. This is higher than standard mortgage rates (2.5–3.5%) because: (1) it's short-term and unsecured against the new property (it's secured against expected sale proceeds), (2) the bank takes timing risk — your sale might fall through, (3) there's no long-term interest income for the bank. Rate comparison: DBS/OCBC/UOB typically offer 5–5.5% p.a. for existing mortgage customers. Smaller banks and finance companies: 5.5–6.5% p.a. Some banks offer promotional rates of 4.5–5% if you take the new property mortgage with them — worth asking. Interest is calculated daily on the outstanding balance, so if you partially repay (e.g., from CPF refund arriving early), your interest drops immediately. Always confirm: is the rate fixed for the full term, or can it change?
When do I actually need a bridging loan?
You need a bridging loan when: (1) you're buying before your sale completes, and you don't have enough cash/CPF to cover the new property's down payment and costs. Example: buying a $1.5M condo (need $375K down + $44.6K stamp duty) while your $600K HDB sale hasn't completed. If your savings + CPF = $200K, you're short ~$220K. The bridging loan covers the gap. (2) You've exercised OTP on the new property and your HDB sale is delayed. You do NOT need a bridging loan if: (a) you sell first and collect proceeds before buying — most common approach, avoids bridge entirely. (b) You have enough cash/CPF to cover the new purchase without sale proceeds. (c) You use HDB's Contra Facility (for HDB-to-HDB moves only) — sale proceeds go directly to the new flat purchase. Selling first saves $10K–$25K in bridging costs. The trade-off: you need temporary housing for 3–6 months ($2K–$4K/mo rent = $6K–$24K). Often cheaper than a bridging loan, especially if the bridge extends past 6 months.
What are the risks of a bridging loan?
Three main risks: (1) Sale falls through: if your buyer pulls out or the sale is delayed beyond the bridging loan term (6–12 months), you're stuck with a loan you can't repay. The bank may force a sale of your old property at below-market price. (2) Sale price drops: bridging loan amount is based on expected sale proceeds. If your property sells for less than expected, the bridge may not be fully repaid, and you owe the difference in cash. On a $600K expected sale, a 5% shortfall = $30K you need to find. (3) Double carrying cost: during the bridge period, you're paying interest on the bridging loan ($2,000–$3,000/mo) plus mortgage on the new property ($3,000–$5,000/mo) plus potentially mortgage on the old property ($1,500–$2,500/mo). Total monthly outflow: $6,500–$10,500/mo for 3–6 months. Make sure you have cash reserves to cover this. Budget 6 months of double carrying costs ($39K–$63K) as a safety net.
What are the alternatives to a bridging loan?
Five alternatives to consider: (1) Sell first, rent temporarily. Cost: $2K–$4K/mo for 3–6 months = $6K–$24K. Usually cheaper than a bridge. Most financially conservative option. (2) HDB Contra Facility: for HDB-to-HDB moves only. Your HDB sale proceeds go directly to offset the new flat purchase. No bridging needed. Free. (3) Negotiate completion dates: align your sale and purchase completion to within 1–2 weeks. Possible but requires cooperative buyers/sellers and good lawyers. (4) CPF funds: if your CPF OA has enough to cover the new property's down payment and costs, you may not need a bridge at all. Check your CPF statement. (5) Personal loan or credit line: some banks offer mortgage equity lines at 3–4% p.a. — cheaper than bridging loans, but requires an existing relationship and sufficient equity. If you must bridge, shop rates across 3–4 banks. Negotiate the processing fee (some waive it for mortgage customers). And list your old property early — every month saved is $2,000–$3,000 in avoided interest.
Related
- Bridging Loan Overview — 5–6% p.a., 6–12 months
- Sell First or Buy First? — sell first = no ABSD, buy first = bridge needed
- HDB to Condo Upgrade — 8 Steps — 8 steps, ~9–12 months
- Sell HDB Buy Condo Timeline — 6–8 month journey
- HDB Contra Facility — direct sale proceeds to new flat (free)
Last updated Feb 2026. Bridging loan rates based on major bank offerings (DBS, OCBC, UOB). Processing fees and legal costs are typical ranges. Actual rates depend on bank, loan amount, and relationship. This is general information, not financial advice.