Buying a property means investing a large number of funds. Many people want to sell their old property and buy a new one. However, many times their old property does not fetch an adequate amount to fund their new purchase. If you find yourself in such a situation, you can consider bridging loans from registered money lenders like A1 Credit.
Learn more about bridging loans in Singapore, their terms and conditions, eligibility criteria, and much more.
What Is a Bridging Loan?
A bridging loan is a short-term loan used to cover the gap between the purchase of a new property and the sale of your current property. It can be used for any purpose, such as home renovations, debt consolidation, or tuition payments.
What Are the Required Documents?
The documentation requirements may vary with the lender. Here are some general documents that you need to submit along with the loan application:
- Identity card / NRIC
- Proof of residence (utility bill, a letter addressed to you, and tenancy agreement)
- Proof of employment (certificate of employment or recent three months payslip)
- SingPass (To log into CPF, HDB, IRAS website)
- Copy of the “Option To Purchase” (OTP)
How Can Lenders Help You?
Experts mention most banks will not approve your bridging loan if your credit score is low. However, money lenders are more likely to grant you a bridging loan even if you have a low credit score. They will check your repayment capability while determining the maximum loan amount.
Lenders like A1 credit offer bridging loans up to $200,000. You can use the bridging loan to finance your purchase of a new home until your old home is sold. Here are some benefits of bridging loans:
- The loan application process is hassle-free. Your application can get approved in one hour or less, provided you meet eligibility requirements and the required documents are in order.
- Most lenders will offer a lower interest rate if you have a good credit score.
- Money lenders offering bridging loans do not ask for collateral to approve loans.
Few Eligibility Criteria
Unlike banks with a long list of eligibility criteria, money lenders have very few criteria, which increases the chances of loan approval. Here is the eligibility criterion for bridging loan:
- The applicant should be at least 18 years old.
- Should have a minimum of SGD1,500 salary.
- Should have exercised an option to purchase.
Lower Interest Rates and Easy Repayment Options
The interest rates for bridging loans are quite low, provided you take the loan from licensed money lenders in Singapore. As per the Singapore Ministry of Law Moneylenders’ Act, the maximum interest rate a lender can charge cannot exceed 4% per month. If the borrower cannot repay the loan on time, the maximum late fee a moneylender can charge is 4% per month for each month until the loan is repaid. The borrower can repay the entire loan within one month.
Things You Should Know
- The lender will ask you to sign a loan agreement when you apply for a bridging loan.
- The loan document lists all terms and conditions of the loan along with interest rate, repayment installments, and loan tenure. You need to read the fine print carefully before signing the document.
- The loan will be approved after you sign the loan agreement.
Thus, a bridging loan is a good option to finance your property purchase. Good properties get sold quickly, and you must act quickly to buy them. Money lenders can provide you with a bridging loan in a few hours and ensure you do not miss the opportunity of buying good real estate.