A bridging loan is a popular form of loan in Singapore that homeowners and investors look for. If you are looking to purchase a new home or investment property, here are some things you should know about bridging loans and how they can come in handy.
When should you get a bridging loan?
As the name suggests, a bridging loan is a form of loan that gives you the money you need to bridge the gap in your finances to make a payment. For example, you may require an urgent loan to cinch the deal on a property while waiting for sales proceeds from your current home or other investments. Most people who take out a bridging loan are usually homeowners upgrading their property from a HDB flat to a condominium or private housing, or investors looking to purchase a property while the price is right. These require considerably large down payments and a bridging loan can be an ideal option to help pay for their dream property even if they do not have enough cash on hand. Bridging loans are not just exclusive to private property buyers. They are also available to homeowners buying a HDB flat too. They are a great loan option for your property needs.
Factors to consider when applying for a bridging loan
1. Interest rate
Taking out a loan from a licensed money lender is often a wiser solution as they offer lower interest rates compared to banks or other financial institutions. There are many free-to-use platforms offering a wide network of licensed money lenders to their customers, to help them compare loans and find the best one for their needs. Besides being free and convenient to use, they also help to verify the legality of the money lenders in their network and ensure that their customers only engage with money lenders with positive reviews.
While every money lender offers different interest rates, make sure you shop around and look for competitive prices and packages to suit your needs. If you are looking for a reliable bridging loan with a lower interest rate, why not consider looking for one from a licensed money lender?
2. Flexible repayments
An important factor to consider is the monthly repayments. We cannot emphasize enough the importance of taking out a loan within your means. A bridging loan has its benefits but you will need to crunch the numbers and see if you are able to repay it on time. As a bridging loan is meant to help bridge the gap in your finances, do make sure that you are able to afford the repayments on top of the mortgage of your new home.
3. Loan amount
A bridging loan should finance only up to 25% of your property purchase and not the entire amount. Ideally, it should help you pay for the deposit or down payment while you wait for the sales proceeds from your current home. While urgent loans, especially personal loans, offer a lower interest rate with a longer loan tenure, you should only borrow the amount you need to bridge the financial gap and not take out more than what you need.
Ready to take the next step with a bridging loan for your dream property? Visit LoanHere to find out more.