Dear all

Need some advice from you about bridging loan. The story goes ..

I sold my house, now waiting for first appointment with HDB.

Meanwhile my new flat is ready for collection (ie keys)

BUT I cannot collect keys because I have to complete second appt before funds go back to CPF, then CPF transfer to HDB then they can give me keys.

In my case, we are downgrading, so the sale of current flat should be enough to cover for new flat purchase, so did not take a loan.

Problem is (which we are so sotong to overlook), it takes a few weeks after 2nd appt for funds to go back to CPF. By then, we would already be out of the house, so need to rent To make things worse, reno will take 2 months, so more rent

It never occured to us before, but are we eligible to take a bridging loan from the bank? Can we take bridging loan of the 90% of purchase price (since we are not taking mortgage loan, HDB require that we pay in full) for 2 to 3 months? If we can do this, that means we can start reno and hopefully second appt coincide with the time reno is done, so no headache of moving, storing, then moving again!

Any idea what is a good bank to go for such arrangement?

Thank you so much!

Dear all

Need some advice from you about bridging loan. The story goes ..

I sold my house, now waiting for first appointment with HDB.

Meanwhile my new flat is ready for collection (ie keys)

BUT I cannot collect keys because I have to complete second appt before funds go back to CPF, then CPF transfer to HDB then they can give me keys.

In my case, we are downgrading, so the sale of current flat should be enough to cover for new flat purchase, so did not take a loan.

Problem is (which we are so sotong to overlook), it takes a few weeks after 2nd appt for funds to go back to CPF. By then, we would already be out of the house, so need to rent To make things worse, reno will take 2 months, so more rent

It never occured to us before, but are we eligible to take a bridging loan from the bank? Can we take bridging loan of the 90% of purchase price (since we are not taking mortgage loan, HDB require that we pay in full) for 2 to 3 months? If we can do this, that means we can start reno and hopefully second appt coincide with the time reno is done, so no headache of moving, storing, then moving again!

Any idea what is a good bank to go for such arrangement?

Thank you so much!

There are many banks, give them a call. They will be more than willing to offer.

But why didn't HDB offer contra? Contra will be cheaper.

There are many banks, give them a call. They will be more than willing to offer.

But why didn't HDB offer contra? Contra will be cheaper.

Dunno, we blur blur never ask anything, they didn't say anything, so now we "stranded" and got to find own arrangement.

Dunno, we blur blur never ask anything, they didn't say anything, so now we "stranded" and got to find own arrangement.

1. Talk to your buyer, pay him rental, to tide over this period (1 wk cpf transfer after + 2 months reno),ie you stay at your unit after 2nd appt.

2. Bridging loan amount varies between 15% to 20% of valuation, and validity(bridging period) lasts for 6 months. Interest usually charged at prime rate + 5-6% per annum based (~ 10%-12% pa). Say 20% = 80k, interest = 80,000x0.1 = 8K for one yr, 6 month will be 4K. Above is a rought estimation only & is how the bridging loan work. However, some banks would just charge a fixed amount, say 1K, after you present all related doc and bank calculate & know their shorest time to get back their loan principal.

Edited May 2, 201016 yr by bepgof

1. Talk to your buyer, pay him rental, to tide over this period (1 wk cpf transfer after + 2 months reno),ie you stay at your unit after 2nd appt.

2. Bridging loan amount varies between 15% to 20% of valuation, and validity(bridging period) lasts for 6 months. Interest usually charged at prime rate + 5-6% per annum based (~ 10%-12% pa). Say 20% = 80k, interest = 80,000x0.1 = 8K for one yr, 6 month will be 4K. Above is a rought estimation only & is how the bridging loan work. However, some banks would just charge a fixed amount, say 1K, after you present all related doc and bank calculate & know their shorest time to get back their loan principal.

Thanks Bepgof

Ha ha ... we are so blur that we agree to let buyer move in early!?!?!

So angry with our agent, she knows our situation, yet not only did not advice us to extend stay from buyer, when buyer's agent asked if buyer can move in early, she did not highlight to us. And we are nice enough (more like naive and stupid) to say, "ya, sure..." , so option 1 is not possible.

option 2 - do you mean that bridging loan can only be max 20% of valuation? Say if mine is a new flat from HDB and I have paid 10% when booking, I cannot take the balance 90% as bridging loan? If the max is 20%, I don't think this option will work for us also.

thanks

Thanks Bepgof

Ha ha ... we are so blur that we agree to let buyer move in early!?!?!

So angry with our agent, she knows our situation, yet not only did not advice us to extend stay from buyer, when buyer's agent asked if buyer can move in early, she did not highlight to us. And we are nice enough (more like naive and stupid) to say, "ya, sure..." , so option 1 is not possible.

option 2 - do you mean that bridging loan can only be max 20% of valuation? Say if mine is a new flat from HDB and I have paid 10% when booking, I cannot take the balance 90% as bridging loan? If the max is 20%, I don't think this option will work for us also.

thanks

Bridging loan is quite speculative in nature, high risk, low doc requirement, not all banks like to do this business, & I think MAS also not in line to encourage such. Try foreign banks, likely will get a higher loan amount.

Feel sorry in your case, learn the lesson will make you wiser.

Edited May 3, 201016 yr by bepgof

Bridging loan is quite speculative in nature, high risk, low doc requirement, not all banks like to do this business, & I think MAS also not in line to encourage such. Try foreign banks, likely will get a higher loan amount.

Feel sorry in your case, learn the lesson will make you wiser.

Thanks Bepgof

Yes, I have engaged the service of housing agent twice, once with purchase of my current house, and now with sale of the same. Both times, I got "cheated" by them over different issues. I thought I had become wiser after the first and not to fall into agent "trap" again, but alas, at that moment of decision, I still succumb ...

Anyway, thanks for your suggestions.

Was at Thomson Plaza today and walked into DBS to enquire about bridging loan. Seems that they can allow bridging loan only if I concurrently take up a housing loan from them. Although they said I can take up a no-lock in housng loan and make full repayment when my funds have been returned into my CPF, I am uncertain .. worried that the interest will be very high in the end... danger of falling into another big spending. Anyhow, waiting for their proposals ...

Thanks

Thanks Bepgof

Yes, I have engaged the service of housing agent twice, once with purchase of my current house, and now with sale of the same. Both times, I got "cheated" by them over different issues. I thought I had become wiser after the first and not to fall into agent "trap" again, but alas, at that moment of decision, I still succumb ...

Anyway, thanks for your suggestions.

Was at Thomson Plaza today and walked into DBS to enquire about bridging loan. Seems that they can allow bridging loan only if I concurrently take up a housing loan from them. Although they said I can take up a no-lock in housng loan and make full repayment when my funds have been returned into my CPF, I am uncertain .. worried that the interest will be very high in the end... danger of falling into another big spending. Anyhow, waiting for their proposals ...

Thanks

In yr situation, likely to do a "full redemption" right after money transfer back to yr cpf accountwithin short. Should take a mortgage loan without "lock-in" period, but read carefully, ususally must inform bank (in written or on prescribed form) 3 months before actual full redemption take place. From this forum, seem worth to take "sibor+ 0.6~0.7%" type of loan. But ask what are the the "hidden costs" like lawyer fee/admin fee/conveyance fee & many many other fees, or sometime banks lump all these up as one package & say "free" but...good luck to you!

Edited May 4, 201016 yr by bepgof

In yr situation, likely to do a "full redemption" right after money transfer back to yr cpf accountwithin short. Should take a mortgage loan without "lock-in" period, but read carefully, ususally must inform bank (in written or on prescribed form) 3 months before actual full redemption take place. From this forum, seem worth to take "sibor+ 0.6~0.7%" type of loan. But ask what are the the "hidden costs" like lawyer fee/admin fee/conveyance fee & many many other fees, or sometime banks lump all these up as one package & say "free" but...good luck to you!

Hi Bepgof

Yes, you are very familiar with all these!

Just went hopping round a few banks the last few days. A foreign bank proposed 85% bridging loan at 8.25%, so that's $1000+ per month. A local bank proposed a 80% mortgage loan plus 5% bridging loan, with a monthly repayment of around $850 a month. And yes, there is legal fee of $1000+, and a 3 month notification period (ie minumum 4 months "loan"). What make it worst is I need to pay another 5% cash to HDB. All these just to "buy" one month of tiime. So I guess I will have to drop that idea!

Thanks for your help!

Hi Bepgof

Yes, you are very familiar with all these!

Just went hopping round a few banks the last few days. A foreign bank proposed 85% bridging loan at 8.25%, so that's $1000+ per month. A local bank proposed a 80% mortgage loan plus 5% bridging loan, with a monthly repayment of around $850 a month. And yes, there is legal fee of $1000+, and a 3 month notification period (ie minumum 4 months "loan"). What make it worst is I need to pay another 5% cash to HDB. All these just to "buy" one month of tiime. So I guess I will have to drop that idea!

Thanks for your help!

Aiyo, don't say like that. Experience counts.., 2 experences only, so far. 1st in 2006, borrow $$369K for a condo, did partial, then full redemption, filled up forms here and there, meeting up at lawyer firms, see doc fly here & there. 2nd in 2009, $466K, doc here & there....lucky got wife keep/file all these doc orderly. Kena one time, mentally not prepared, bank revised interest rate dur to unrest in middle east, luckily it was within 6 month after 1st disbursement, I could switch to "fix" rate. After that my wife loves "fix" rate very much, no matter how I present the interest figure we could have saved, I gave in. I'll seach for the interest revised notice letter & scan and post it here, if I remembered correctly, should be about $200 increase monthly!. hope can give some awareness to someone who read.

Also ever approached banks for bridging loan, but gave up the idea cos of the interest rate.

Edited May 5, 201016 yr by bepgof

Aiyo, don't say like that. Experience counts.., 2 experences only, so far. 1st in 2006, borrow $$369K for a condo, did partial, then full redemption, filled up forms here and there, meeting up at lawyer firms, see doc fly here & there. 2nd in 2009, $466K, doc here & there....lucky got wife keep/file all these doc orderly. Kena one time, mentally not prepared, bank revised interest rate dur to unrest in middle east, luckily it was within 6 month after 1st disbursement, I could switch to "fix" rate. After that my wife loves "fix" rate very much, no matter how I present the interest figure we could have saved, I gave in. I'll seach for the interest revised notice letter & scan and post it here, if I remembered correctly, should be about $200 increase monthly!. hope can give some awareness to someone who read.

Also ever approached banks for bridging loan, but gave up the idea cos of the interest rate.

Yup, always very scared to deal with banks, for that matter CPF, HDB, ... all these $$ places.

I guess if plan to fully redeem within short period, quite safe to go for floating rate kind, because got no penalty, also no need to pay mortgage insurance which is cash and can be quite hefty.

But if planning longer tenure, definitely safer to go for "fixed" rate. Can never anticipate if curve will go up or down lor!

Speaking of banks, now looks like we have to take reno loan. Really sickening, remember I said we were naive? When we asked HDB does COV mean cash in hands, regardless of CPF usage, they said yes. Only today at the bank did I realise that my COV has to return to CPF, so no cash, so need to get reno loan! Know anything about this? Like which bank offers the best rate etc? Sigh ... looks like I need to make another trip down to bank tomorrow

Yup, always very scared to deal with banks, for that matter CPF, HDB, ... all these $$ places.

I guess if plan to fully redeem within short period, quite safe to go for floating rate kind, because got no penalty, also no need to pay mortgage insurance which is cash and can be quite hefty.

But if planning longer tenure, definitely safer to go for "fixed" rate. Can never anticipate if curve will go up or down lor!

Speaking of banks, now looks like we have to take reno loan. Really sickening, remember I said we were naive? When we asked HDB does COV mean cash in hands, regardless of CPF usage, they said yes. Only today at the bank did I realise that my COV has to return to CPF, so no cash, so need to get reno loan! Know anything about this? Like which bank offers the best rate etc? Sigh ... looks like I need to make another trip down to bank tomorrow

Har? COV go to cpf account? No lah, what goes back to cpf is (valuation - what you have paid by cpf over the year -accrued interest). Can use yr singpass to log on to CPF board to find out the exact amount need to return to yr account if were to sell yr property. The balance + COV are cash.

Edited May 5, 201016 yr by bepgof

Froggy, some unclear things here:

1. You're taking HDB's 2nd loan for the new house?Got apply HLE?

2. One person/couple, depending which scheme, cannot own 2 hdb units at one time, so u cannot collect keys for new house because of this policy, right ? But there is a "overlapping" allowance time, not such how long is this period. Anyone cares to enlighten?

3. Why the bank says COV goes to cpf account? Unless you are taking the 2nd HDB loan, then 50% of CASH proceeds will go to cpf account under new rule. U would still have some CASH receivable.

Edited May 6, 201016 yr by bepgof

Froggy, some unclear things here:

1. You're taking HDB's 2nd loan for the new house?Got apply HLE?

2. One person/couple, depending which scheme, cannot own 2 hdb units at one time, so u cannot collect keys for new house because of this policy, right ? But there is a "overlapping" allowance time, not such how long is this period. Anyone cares to enlighten?

3. Why the bank says COV goes to cpf account? Unless you are taking the 2nd HDB loan, then 50% of CASH proceeds will go to cpf account under new rule. U would still have some CASH receivable.

Hi Bepgof

We have already used 2 HDB loan, so not eligible any more. What is HLE, sorry I still very blur? Is it some kind of bank loan thing? You see, we are downgrading, and the new one is BTO which I have already been asked to collect keys. But because I have not completed sale of current flat, money not in CPF yet so I cannot collect keys (since at first I do not plan to take bank loan because the funds returned to CPF is enough to fully pay for new flat since downgrading so many rungs)

Own 2 flats, no lah. Right now, we are still owner of current flat because have not completed second appt. New BTO we had booked only paid 10% at booking time, so I dunno if they consider the second one is our flat yet? I guess not right, because if I fail to collect keys without reason, the deal will be considered lapsed and the downpayment unrefundable.

I don't understand what you mean by overlapping allowance time. As far as I know, as in my case, when the BTO is almost ready, HDB started to send "reminder" letters about its probable completion date, ie asking you to sell your existing flat. The first letter they sent was about 4 months prior to the collection date, so they expect that that is sufficient time for you to sell. As long as you can show OTP, they are ok becasue they know the appts must queue and takes time. Worst case, if you are unable to produce OTP at the time you have to collect keys, you can ask for extension, but case to case. And from what i gather from the officer, only max 1 month. I am not sure if they will actually "force" you to sell at the end of that grace period, though, or how they are going to do it!

Anyway, for most people who are either getting a HDB or bank loan, they can already collect the keys even if their current flat have not completed transaction. But for me, because no loan, got to wait for funds to be returned to CPF, ie 2nd appt.

Not sure about your 3rd point, but what I gather yesterday was - if the sum to be returned to CPF is less than the CPF monies used, then the COV component has to be returned as well. For eg,

scenario 1

flat sold at 500k (450 valuation and 50k COV)

balance mortgage loan 300k

CPF money used for flat is 400k (including all accrued interests),

first, HDB will take back 300k to clear the loan, so left 200k

since CPF funds used is 400k, CPF will take all 200k (with deficit of 200k taken as interest lost)

so no $$$ in cash

Scenario 2

flat sold at 750k (700 valuation and 50 COV)

balance loan 300k

CPF monies used 400k

return HDB 300k

return CPF 400k

still got 50k balance, so this is cash in hands

Is this correct? The previous officer (pity not black and white, and I did not take down name) I spoke with said that as long as COV = cash, regardless of how much CPF monies has been used, and now this one gave another story. Honestly I am quite **** with HDB, each staff gives a different kind of reply at different times. Very confusing and we are always at the suffering end.

Bro Froggy,

Your sales is positive or negative? Meaning u make a decent profit selling or lost when selling?