How Do You Calculate A Bridging Loan?

Dexter Lee October 6, 2022

How Do You Calculate A Bridging Loan?

If you’re looking to take advantage of a low interest rate on bridging loans, there’s no better time than now.

With many licensed money lenders offering competitive rates and flexible repayment terms, you can get the money you need without having to pay high fees or interest rates.

However, when it comes down to it, every borrower should know a few things before applying for a bridging loan.

Let’s discuss how to calculate bridging loan, how much it costs, and the fees and charges that come with this type of loan.

What Is A Bridging Loan?

A bridging loan is a short-term loan with a six-month payback period.

It helps you make the downpayment on your new home and other related costs while you wait for the sale proceeds of your old home to be processed.

Overall, bridging loans in Singapore make it easier for you to purchase your next real estate.

How Can A Bridging Loan Help You?

A HDB bridging loan can help you get the cash you need to buy or renovate your home.

This is because the interest rates on bridging loans are usually much lower than what you would pay for an ordinary mortgage.

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    Mortgages charge high interest rates so that they can make their money back from your monthly payments over time.

    A good example of this would be an average person who takes out a $200,000 mortgage with an annual percentage rate (APR) of 7%. They will rack up over $2,000 just in interest alone each year.

    That means after two years (the typical life span for a 30-year fixed rate), the person ends up paying over $40,000 in total without even considering any other costs associated with getting into debt such as late fees or penalties for jumping ship early.

    A bridging loan is designed to help you overcome this hump and pay back the interest quickly. It is also a great option if you need money immediately but don’t want to commit to a long-term loan.

    Unlike mortgage loans, which tend to last for 20 years or more, bridging loans are paid back in just one year, or sometimes less.

    What To Consider Before Getting A Bridging Loan

    Before you apply for a property loan, there are some things to consider.

    Loan Amount

    This is one of the biggest factors when it comes to how to calculate a bridging loan. You need to work out how much to borrow and how long it will take to repay your home loan.

    Ask yourself what exactly does this loan cover?

    Knowing your home’s purchase price and having a rough estimate of how much you’ll need will help you avoid the trap of borrowing more than you can repay.

    With an estimate of the loan amount, you can compare repayment terms from different licensed money lenders and settle for one that best fits your needs.

    Bridging Loan Interest Rates, Fees, And Charges

    Bridging loans from banks have higher interest rates of 5-6%, while licensed money lenders charge lower interest rates of 1-4%.

    Your credit report is likely to determine the interest rate a lender will charge you.

    This means low-risk borrowers are charged lower interest rates while high-risk borrowers are charged higher interest rates.

    However, your credit score may not influence the approval of your loan. While licensed money lenders may check the score, most of them will rely on your salary to determine how much you can borrow.

    When you take a bridging loan, some fees and charges can add up to 3% of your total loan amount. These fees can include:

    • Application fee
    • Late fee
    • Credit report request charge (if applicable)

    You should ensure that these fees don’t exceed the principal loan amount.

    Repayment Terms

    You need to know the type of repayment plan that has been set up so that you can make an informed decision about whether this is the best option for you.

    Bridging loans from licensed money lender CreditMaster are a different ball game altogether.

    The interest rates charged range from 1-4%, meaning you’ll pay far less than what you would pay on a standard mortgage.

    In addition, licensed money lenders do not require monthly payments as mortgages do.

    Instead, they ask for a one-time lump sum repayment typically due within 30 days of closing your loan.

    Such loans are ideal if you have some time on your side and want a flexible repayment plan that won’t tie up too much of your capital.

    How To Apply For A Bridging Loan

    When you’re in the market for a property loan in Singapore, you must understand the type of loan you are looking for and how it works.

    The first step in applying for financial assistance is to choose a loan that fits your current situation. There are two main types of bridging loans: short-term and long-term.

    • A short-term bridging loan will last from 30 to 90 days
    •  A long-term bridging loan can last up to five years , depending on the lender

    The second step is to check whether you meet the borrowing criteria for the bank or money lender you’re borrowing from.

    Eligibility Criteria For Banks

    You need to:

    • Be at least 21 years and above
    • Have a registered and operational private property in Singapore
    • Be a Singaporean or permanent resident with at least 30% shareholding of the property


    • Verified financial statements for the last two years
    • Most recent bank statements
    • Copies of owners’ or guarantors’ NRIC
    • Latest Personal Income Tax Of Notice Assessment for owners or guarantors

    Eligibility Criteria For Money Lenders

    You need to:

    • Be a Singaporean or permanent resident
    • Be at least 21 years old
    • Have exercised the Option To Purchase (OTP)
    • Be employed and earning about $1,500 for permanent residents and $2,000 for foreigners


    • Valid CPF account
    • NRIC
    • Proof of income
    • Proof of employment
    • Proof of residence

    Now that you’ve chosen your preferred lender and met its eligibility criteria, fill up an application form with personal information such as:

    • Name
    • Address
    • Phone number
    • Email address
    • Income figures such as salary or commissions earned during the previous month or year, etc

    Lastly, after you have completed the application form, submit it with supporting documents.

    For example, if any financial statements such as tax returns or bank statements support your income claim, attach them in your application.

    How To Calculate Bridging Loan

    The first step when it comes to how to calculate a bridging loan is to determine how much you need.

    This can be done in several ways, but the most common method is to take the total amount of your mortgage and subtract any outstanding payments from it.

    For example, suppose you have a $250,000 mortgage with a 4% interest rate and payments due every month in September and February (and no other charges).

    In that case, you will need $169,700 over 30 years for this particular scenario – or about $733 per month for 30 years.

    Once you know your starting point (i.e. how much money you’ll need upfront), you need another figure – interest rates.

    Bridging loans’ interest rates tend to differ between various licensed money lenders and banks. The interest rate also depends on the state of the market at any given time, so don’t take anyone’s word for it when they tell you what kind of deal should materialise.

    Instead, use an online calculator to choose your preferred rate and determine how much bridging loan you can borrow.

    A Bridging Loan Can Be A Big Help

    As you can see, getting a bridging loan is not always easy. However, it’s worth the effort.

    In addition to helping you get the financial relief you need, learning how to calculate a bridging loan will also save you time and money.

    Once you have applied for this loan, there are no associated fees or charges, just interest rates that are typically much lower than other types of loans offered in the market.

    At CreditMaster, we offer bridging loans with flexible payment terms that fit your situation.

    To apply for a loan, fill up a short online application, or contact us today.

    Dexter Lee

    Born with a pen in one hand and a keyboard in the other, Dexter's been crafting words into beautiful prose since he was old enough to scribble on his walls (much to his mother's chagrin). He's a self-proclaimed pun master, often leaving his coworkers in stitches with his clever wordplay. He's been known to strike up conversations with strangers and turn their stories into captivating content that keeps readers coming back for more. Despite his unconventional approach to life and work, Dexter takes his job as a content manager very seriously. He knows that every piece of content he produces has the power to make a difference in someone's life, and he's committed to using his words for good.

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