A bridging loan covers the gap between buying your next property and completing the sale of your current one. Used correctly, it lets you upgrade without rushed sale timing. Used wrongly, it adds interest cost to a transaction that didn't need it. Here's the picture.

How bridging loans work

You've committed to buying Property B (paid down payment, signed OTP). You haven't yet sold Property A. You need cash to complete Property B's purchase but Property A's sale proceeds aren't available yet.

A bridging loan from a bank provides interim financing — typically up to 80% of Property A's expected sale price (minus mortgage outstanding). The loan is repaid when Property A's sale completes.

Typical terms (2026)

  • Loan amount: up to ~80% of Property A's net equity (sale price minus mortgage outstanding)
  • Tenure: 6 months typical, extendable to 12 months
  • Interest rate: 4.5–6.0% per annum (higher than regular mortgages)
  • Eligibility: existing relationship with the bank often required; Property A must be actively listed or under firm sale agreement

Worked example

Couple owns Property A (current home), valued at SGD 1,500,000 with SGD 400,000 mortgage outstanding. Net equity: SGD 1,100,000.

They commit to Property B at SGD 2,200,000. Down payment required SGD 550,000 (25%). They have SGD 200,000 cash but need the rest from Property A's eventual sale.

Bridging loan: up to 80% × SGD 1,100,000 = SGD 880,000 available. They draw SGD 350,000 to complete the Property B down payment.

Interest cost at 5% for 6 months on SGD 350,000 = SGD 8,750. When Property A sells, the bridging loan is repaid and the family settles into Property B.

When bridging loans make sense

  1. You've found Property B in a hot market. Waiting to sell Property A first risks losing Property B. Bridge lets you lock in the new purchase.
  2. You can't rush Property A's sale. Maybe you want full marketing time to maximise price, or there's a specific buyer pool to wait for.
  3. Renovation between sale and purchase. You want to move into Property B while Property A is being renovated for sale (improving sale price).
  4. School year timing. Moving in time for school year start may not match Property A's optimal sale timing.

When bridging loans don't make sense

  1. Property A is hard to sell. If Property A's marketability is poor, you may extend the bridge multiple times — interest stacks up.
  2. You're stretching maximum LTV. If your TDSR is already at limit on Property B alone, adding bridge loan interest can push you over.
  3. You haven't actively listed Property A. Banks generally won't approve bridging without firm sale activity on Property A.
  4. The numbers are tight. 5–6% interest on SGD 350k for 6 months is SGD 8,750. That's real money on a thin-margin upgrade.

Bridge vs sell-then-buy

For most upgraders, the cleaner approach is sell first, then buy. The 6-month matrimonial home refund scheme covers the ABSD risk if buying within 6 months of selling. You avoid bridging interest costs entirely.

The downside: you may need temporary housing between selling Property A and completing Property B. Short-term rental costs SGD 4,000–8,000/month for 2–6 months — sometimes less than bridge loan interest, sometimes more.

Bridge vs buy-then-sell-fast

Alternative: complete Property B purchase using maximum cash + max LTV, then aggressively price Property A for fast sale. Avoids bridging loan but requires having significant cash on hand and accepting a possibly lower Property A sale price for speed.

The bottom line

Bridging loans are a specific tool for a specific situation: upgrader buying Property B while Property A sale is in progress, willing to pay 5–6% interest for 3–6 months to preserve timing flexibility. For straightforward sell-then-buy upgrades within 6 months, no bridge is needed. For complex timing scenarios (school year, hot market new launch, renovation overlap), bridging can be the cleanest path.

For an analysis of whether bridging fits your specific upgrade scenario, request a consultation.