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As a retiree above 70 years old who owns a private property and wants to buy a 4-room HDB flat in Singapore, can I use a bridging loan to purchase the HDB first before selling my private property, how much bridging loan can I use, and is it acceptable to only declare an intent to sell my private property instead of selling it first?
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If you are a retiree above 70 years old, currently own a private property, and plan to buy a 4-room HDB flat first before selling your private home, you may consider using a bank bridging loan to help with your cash flow.
A bridging loan is a short-term facility designed to “bridge” the gap between the purchase of your new property and the sale proceeds from your current property. In Singapore, you can use a bridging loan to cover the downpayment or balance purchase price for your new HDB flat while you wait to receive funds from selling your private property. The amount you can borrow is generally based on the expected sales proceeds from your private property, after deducting any outstanding home loan and mandatory CPF refunds.
How much can you borrow?
- The bridging loan can cover the portion of your new flat’s purchase price that is not covered by your main home loan and that you expect to pay once your private property sells.
- Most banks will offer a bridging loan based on the net proceeds (cash plus CPF refunds) you are due to receive from the sale.
- The typical bridging loan is short-term, usually up to 6 months, and the interest rate is generally higher than a regular mortgage.
- Keep in mind you must have already secured an Option to Purchase for both your new HDB flat and your existing private property before the bank will process your bridging loan application.
- The bridging loan can cover the portion of your new flat’s purchase price that is not covered by your main home loan and that you expect to pay once your private property sells.
- Most banks will offer a bridging loan based on the net proceeds (cash plus CPF refunds) you are due to receive from the sale.
- The typical bridging loan is short-term, usually up to 6 months, and the interest rate is generally higher than a regular mortgage.
- Keep in mind you must have already secured an Option to Purchase for both your new HDB flat and your existing private property before the bank will process your bridging loan application.
On selling your private property:
You cannot just declare an “intent to sell”; Singapore banks will require documentary proof that you are in the process of selling, such as a valid and exercised Option to Purchase for your current private property. Simply stating your intention to sell is not sufficient for a bridging loan application—the bank needs assurance the sale will go through to have clarity on the amount you will receive.
You cannot just declare an “intent to sell”; Singapore banks will require documentary proof that you are in the process of selling, such as a valid and exercised Option to Purchase for your current private property. Simply stating your intention to sell is not sufficient for a bridging loan application—the bank needs assurance the sale will go through to have clarity on the amount you will receive.
Steps for your situation:
- Check that you are eligible to buy an HDB flat under current rules, as you need to dispose of your private property within 6 months of the HDB purchase.
- Secure the Option to Purchase for the HDB flat.
- Secure the Option to Purchase for your private property.
- Approach your preferred bank to apply for both your HDB home loan and bridging loan.
- Prepare and submit all required documents: sale and purchase agreements, proof of exercised OTP, CPF statements, and any other documents requested by the bank.
- Use the bridging loan to fund your HDB flat purchase; upon completion of your private property’s sale, repay the bridging loan.
- Check that you are eligible to buy an HDB flat under current rules, as you need to dispose of your private property within 6 months of the HDB purchase.
- Secure the Option to Purchase for the HDB flat.
- Secure the Option to Purchase for your private property.
- Approach your preferred bank to apply for both your HDB home loan and bridging loan.
- Prepare and submit all required documents: sale and purchase agreements, proof of exercised OTP, CPF statements, and any other documents requested by the bank.
- Use the bridging loan to fund your HDB flat purchase; upon completion of your private property’s sale, repay the bridging loan.
You should also seek direct financial advice and consult HDB and your bank for detailed requirements, as your age, income status, and loan servicing ability will be factored into your eligibility and maximum loan amount.
Thank you for your query with EdgeProp Buddy. As a reminder, I'm in Beta mode and it's always wise to seek counsel from a real estate professional for these types of matters.