Bridge loans in Singapore have emerged as a lifeline for individuals and businesses. They are designed to bridge the gap between immediate and long-term financial needs. In this article, we will answer all your questions about Bridge Loans and its functions.
What are Bridge Loans?
Bridge loans, also known as bridging loans or bridge financing, are short-term financial solutions designed to provide immediate funding for liquidity gaps.
In Singapore, these loans are commonly used to release equity for business ventures, investment opportunities, or other immediate financial needs. Unlike traditional loans, bridge loans are asset-backed, relying on the value of the borrower's property rather than their personal financials. These loans typically feature "interest-only" or "interest-servicing only" payments, with a bullet repayment at the end of the term.
How Bridge Loans Work
Bridge loans provide short-term funding that enables individuals and businesses to address immediate financial needs. Lenders evaluate the borrower's financial situation, including creditworthiness and the value of the collateral. Due to the quick availability of funds, bridge loans often come with higher interest rates. Once approved, the loan can be used for various purposes, such as improving cash flow, debt repayment, or funding business ventures. The loan is typically repaid using proceeds from a sale, a liquidity event or long-term financing.
Benefits of Bridge Loans in Singapore
Bridge loans offer several advantages, making them a popular choice for many borrowers. Some key benefits include:
Quick Approval and Funding
Unlike traditional home loans, bridging loans are favoured for their rapid approval processes. This is especially advantageous in situations when time sensitivity is critical to finalize an investment opportunity or a purchase. If the property is unencumbered, lenders can fund in as fast as a week.
Improve Your Liquidity
Bridge loans allow borrowers to ease their liquidity issues by providing immediate access to funds from extracting equity from their properties. This provides a short term solution whilst they stabilise their cash flow.
Easy Qualification
Traditional banks often have restrictions, like limiting the loan-to-value (LTV) ratio to 40% if you have more than three mortgages or requiring you to have a certain amount of assets under management (AUM) with the banks. With traditional banks, it’s also challenging for older borrowers to qualify for a loan due to their age. With Global Mortgage Group, these issues are not a barrier, offering a more flexible and accessible alternative.
GMG bridge loans, offered to individuals and companies, are not subjected to Total Debt Servicing Ratio (TDSR) constraints. However, it's important to note that these loans serve as short-term solutions and are not intended to replace traditional long-term bank mortgages.
Where to Obtain Bridge Loans in Singapore?
At Global Mortgage Group, we've funded over $200 million bridging loans in 2024 in Singapore, focusing on high-value properties like Good Class Bungalows, condominiums, landed houses, and commercial properties.
Traditional banks in Singapore have tightened their lending criteria, creating a demand for alternative lending solutions. We offer quicker, more flexible lending solutions compared to traditional banks, with high Loan-to-Value ratios of 70-80% and fast funding within 2-4 weeks. Our loans are not affected by Singapore's Total Debt Servicing Ratio (TDSR) and come with no prepayment penalty.
What Do You Need to Secure Bridge Loans
- A property to pledge as collateral
- An exit strategy
FAQs
What is a bridge loan?
A bridge loan is a short-term loan designed to provide immediate financing for liquidity gaps.
How long does it take to get a bridge loan?
The approval process for a bridge loan can be faster than traditional loans, often taking a few days to a week.
Can businesses use bridge loans?
Yes, businesses can use bridge loans for various purposes, including managing cash flow during expansions or acquisitions.
