During our recent live webinar on “Need Liquidity? Discover Singapore Short-Term Bridge Loans,” our expert host, Madel Tan (MT), received numerous questions from participants. For those who have missed the opportunity to join the webinar, it is available here.
Remarks have been edited for clarity and brevity.
Q1: What is the typical funding timeline?
MT: Typically, funding for unencumbered properties can be finalised in less than a week. However, if dealing with existing banking institutions like local banks, it might take about a month due to potential delays on their end. If liquidity needs arise, please let us know so that we can work with both existing and new lenders to expedite the process.
Q2: What are the closing costs?
MT: Borrowers are usually responsible for covering legal fees, valuation fees, and fire insurance, similar to conventional bank loans. Closing costs vary based on the loan size and property. Different lenders have their preferred lawyers and valuers, depending on who is on their approved panel list. Thus, the fees would vary. For a more accurate estimate, please share your funding requirement and property details so we can provide a range of estimated closing costs.
Q3: I’m 74 years old. Can I still qualify for a loan?
MT: Yes, we have assisted numerous clients, including those above 70, with diverse real estate portfolios in Singapore. Typically, lenders may request a simple memo or letter from a general practitioner such as a medical certificate to confirm your mental clarity and cognitive fitness. This straightforward process ensures eligibility regardless of age.
Q4: What is the minimum loan amount to qualify?
MT: For a Singapore bridge loan, the minimum loan amount is $1 million. We are capable of extending lending beyond $100 million for larger transactions. If you have deals falling outside this range, we are open to discussing them in further detail to accommodate your needs.
Q5: How do you navigate Total Debt Servicing Ratio (TDSR) constraints?
MT: As these loans are deemed private and structured for accredited investors, they are not subjected to TDSR regulations. However, it's important to understand that these loans are short-term solutions and are not meant to replace traditional bank loans. We prioritise establishing a clear exit strategy before proceeding with a bridge loan, which may involve various options such as sale of the property, maturing investments, or fixed deposit redemptions etc. This approach ensures responsible and manageable financing for our clients.
Q6: Hi, what’s the standard interest rate applicable to such bridging loans?
MT: The standard interest rate for bridging loans usually starts at 8.5%. Payments are structured as interest servicing only, with the principal repayment made as a bullet repayment at the end of the loan term. This arrangement ensures manageable monthly obligations for borrowers.
Q7: Is financing available for both residential and commercial properties?
MT: Yes, financing is available for both residential and commercial properties. Typically, lenders prefer freehold properties, especially for residential ones. However, we can still assist with leasehold properties, though additional valuation and lender checks may be required, especially properties with very short leases remaining. We are equipped to handle various property types, ensuring comprehensive financing options for our clients.
Q8: I’m 68 years old. I can no longer get a bank mortgage. Do I still qualify for your loans? I will sell the property in 12 months.
MT: Yes, you may still qualify for our loans. Our private loans, offered to accredited investors, 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 bank mortgages. Before proceeding with the loan, we typically require clients to have a clear exit strategy in place. This exit strategy could involve various options, such as selling the property, utilising overseas funds, or maturing investments/fixed deposits. Having a clear exit plan is crucial to ensure a smooth transition out of the bridge loan.
Q8: What are the payment terms?
MT: The payment terms are straightforward: it's interest servicing only. This means that you'll only need to pay the interest amount each month. Then, at the end of the loan term, you'll make a bullet payment to cover the principal amount.
Q9: May I know what the usual interest rate is?
MT: The usual interest rate typically starts at 8.5%, but it can vary depending on the specifics of your situation. For instance, if you need the funds really quickly, like within three days, the rate might be a bit higher. Feel free to drop me a message, and I can give you a better idea of what rate you might expect. But as a general guideline, our rates usually start at 8.5%, and it's interest-servicing only.
Q10: Can I get a loan with a high loan to value even though I own 4 landed properties in my own name?
MT: Absolutely, we've worked with many clients in similar situations. Traditional banks often have restrictions, like limiting the loan-to-value (LTV) ratio to 40% if you own more than three properties or requiring you to have a certain amount of assets under management (AUM) with them. With us, however, this is not an issue. We're here to help, so feel free to reach out, and we'll find a solution that works best for you.
Q11: How long will the interest-only loan last?
MT: Usually, our interest-only loans are designed as short-term solutions, not as replacements for traditional long-term bank loans. The duration typically ranges from 12 to 24 months, but sometimes, we can extend it a bit longer depending on the lender and good repayment conduct.
Q12: Can I finance a private condo in Florida valued at around $700,000, or do your loans typically start at amounts higher than $1 million? Thanks.
MT: Absolutely, we can assist with that. Financing a property of this value in the U.S. is not an issue for us. Our wholly-owned subsidiary, America Mortgages, is a licensed lender in the United States and provides U.S. loans starting from $150,000. Please provide your email address or contact details, and we'll reach out to provide you with more information on U.S. financing options.
Q13: Do you offer loans longer than 1 year?
MT: Yes, we do offer loans with durations longer than one year. Our loan terms typically range from 24 to 36 months at maximum.
Q14: Can you lend on strata title commercial?
MT: Yes, definitely, we can.
Q15: I own a shophouse. What LTV can you do on this? How fast can I get the money? There is no debt.
MT: If there's no existing debt on your shophouse, we can expedite the financing process. Upon signing, we can typically fund the loan within a week. LTV for your shophouse would typically range from 70% to 75%. If you'd like to discuss further details, feel free to reach out to me via email or WhatsApp, and we can continue the conversation.
Q16: Can a bridge loan be done with an overseas property?
MT: Certainly, of course. We can assist with overseas property. Usually, our lenders are onshore, meaning that if your property is located in the UK, for instance, we will work with a UK-based lender to facilitate the financing process.
Q17: You mentioned 1-2 weeks of processing time. Would that be sufficient for charge/pledge documents to be prepared?
MT: Typically, with a processing time of one to two weeks, there should be enough time to prepare mortgage documents, especially if the property is unencumbered. However, if there is an existing charge on the property, it may take longer than a week as we'll need to discharge the property before proceeding.
Q18: 8.5% is the starting rate; how do you qualify for that?
MT: Factors such as the client's profile and the property itself are considered to qualify. If you reach out to me, I can assess your specific situation and provide a more accurate rate fairly quickly.
Q19: Are you licensed in Singapore? By MAS, presumably?
MT: In Singapore, you do not need to be licensed to be a broker, but our Singapore lenders are licensed and regulated. Please note that our subsidiary, America Mortgages, is a licensed lender in the U.S.
Q20: How fast can you close a Singapore loan?
MT: The fastest turnaround time we've achieved for a Singapore loan was 48 hours. However, typically, for unencumbered properties, we can close within a week. If there is existing debt on the property, the process may take approximately a month, mainly due to potential delays at the bank's end.
Q21: What’s the minimum loan amount for a U.S. property and loan to value?
MT: The minimum loan amount for U.S. property is $150,000. Typically, the minimum down payment required is 25% for expats and 30% for foreign nationals.
Q22: What happens if the borrower is unable to repay the bullet in full? Is there flexibility to extend the loan term?
MT: If the borrower cannot repay the loan at the end of the term, there may be flexibility to extend the loan. Typically, if the borrower has maintained good repayment conduct by servicing the monthly interest payments on time, the lender may be willing to extend the loan. Additionally, if there is sufficient equity in the property, we can explore the option of refinancing with another lender if the existing lender does not wish to extend the loan. In most cases, if the borrower has demonstrated good payment conduct, the lender will be open to extending the loan term.
Q23: What is the loan to value for a Singapore bridging loan, and is my income and credit a need?
MT: Typically, the LTV ratio for a Singapore bridging loan ranges from 70% to 75% max. While you will be required to submit documents such as your Notice of Assessment (NOA) and credit report, income and credit requirements are not strict criteria for loan qualification. Even if you have had an adverse credit history or are retired without local income, you can still qualify for a loan. While these documents are necessary for submission, they do not significantly impact your eligibility for the loan.
Q24: Do you work with brokers?
MT: Yes, we collaborate with brokers through co-broking partnerships to facilitate transactions.
Get in touch with Madel Tan at [email protected] today!
