What happens when the funds from the sale of your existing HDB flat will only be freed in a month, but you need those funds to purchase a new HDB flat NOW!
A HDB bridging loan is something you don’t hear about very often. In fact, this may be the first time you have heard about a HDB bridging loan. It is one of those things that will show up and you will truly be grateful for when you really need a solution to a cash flow crunch for purchasing your HDB flat.
In effect, a HDB bridging loan facilitates to help you purchase a HDB flat before selling your existing HDB unit. It is a short-term loan and you have to repay it once you sell off your existing HDB unit, unless there are some extraordinary circumstances accepted by the lending bank. Don’t confuse a HDB bridging loan with a HDB bank loan.
A HDB bridging loan can offer you a loan up to a certain percentage of the purchase price or the fair market value (whichever is lower).
HDB bridging loans are useful for the following situations:
1) When you exercise your Option-To-Purchase (OTP) for a HDB flat
2) When you are required to pay a booking fee to the developer
3) When you are purchasing a property under construction
4) When you want to buy a HDB flat with the proceeds from the later sale of your existing HDB flat
Be careful when taking up bridging loans because these loan have high interest rates and are usually the HDB home buyer’s final alternative. If a bridging loan can keep you afloat in the short term, it will save you from losing money you had already put down on a property. If you take up a HDB bridging loan for the sake of leverage, be mindful and properly assess your situation.
Note that the underlying condition for applying for HDB bridging loan is that the proceeds of your impending HDB unit sale has yet to be released, and you require those funds now for the purchase of a new HDB unit.
You will be required to proof that. Failing which, you will not qualify for HDB bridging loan.