A bridging loan provides short-term financing when you need to buy a new property before your existing one is sold. They are common among upgraders in Malaysia and carry higher rates than conventional mortgages. Here is everything you need to know.
What Is a Bridging Loan?
A bridging loan covers the gap between purchasing a new property and receiving proceeds from selling the old one. For example, if your new home purchase completes in April but your existing home sale only finalises in August โ you need 4 months of bridging financing.
How Bridging Loans Work in Malaysia
| Feature | Details |
|---|---|
| Typical duration | 3โ12 months |
| Interest rate | BR + 1.5%โ3.0% (typically 5.5%โ7%) |
| Repayment | Interest only during bridge period |
| Security | Existing property + new property |
| Max bridge amount | Usually up to 90% of existing property equity |
Calculate the cost of your bridge period using our ๐ Mortgage Calculator โ enter the bridge amount and the higher rate to see monthly interest.
Example: Upgrading from RM500k to RM800k Home
- Old home market value: RM600,000; outstanding loan: RM100,000
- Equity available: RM500,000 (for deposit on new home)
- New home price: RM800,000; new loan needed: RM720,000 (90%)
- Bridge period: 6 months while waiting for old home to sell
- Bridge amount: RM720,000 at 6.5% = RM3,900/month interest only
Risks & Alternatives
Risks: If your old home takes longer to sell, bridge costs escalate. In a slow market, you may be forced to reduce the asking price. Alternatives: Negotiate a longer completion period for the new purchase, use personal savings/ASB withdrawal temporarily, or sell first then rent while buying.
Our editorial team specialises in Malaysian personal finance โ covering loans, taxation, insurance, EPF, and Islamic finance. Every article is fact-checked against Bank Negara Malaysia (BNM), LHDN, and major Malaysian bank publications. We reference our calculators (which use industry-standard formulas) to ensure consistency between our written content and tools. Learn more about our methodology โ