Bridging Loan

A Guide to Building Your

Dream Home
Helping you to get on the
property ladder
Whether you are considering building a new home,
or renovating or extending your current home, our
Bridging Loan could help you achieve your dreams.

At Danske Bank, we will help you throughout the

build process.

Our team of specialist Mortgage Consultants are on

hand to give advice and share their knowledge and
expertise. We will explain the process from start to
finish, help you understand the full costs involved and
work closely with you throughout the build.

Read on to find out more about how you can create

your dream home with a Danske Bank Bridging Loan.

You must be in permanent employment (i.e. successfully completed any probationary pe-
riod) and not be employed on a fixed term contract.

You must be over 18. Lending criteria, terms and conditions apply. Your home is security for
your mortgage. Other security may be required.

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 A Danske Bank Things to Consider
Bridging Loan for the Build

A Bridging Loan differs Key Features and benefits

from a residential
mortgage. It is a short term
Interest Only loan that
• Minimum term is 6 months, with
1. When considering your dream home, draw up
a maximum of 18 months a list of what you want from the house, such as:
• No restrictions on making
overpayments or lump sum
payments and, as interest is
• the design of the house

releases funds in stages
as the build progresses.
This means that you only
start to make interest
payments as funds are
released, which could help
keep costs to a minimum
during the build period.
calculated daily, this means you • size of the house
get the benefit straight away
• number of bedrooms and bathrooms
• No Early Repayment Charges
• number of storeys
• No minimum loan amount
• type of materials for construction
• Only available on residential
properties in Northern Ireland • type of heating
• An arrangement fee will apply
• a budget to work to
• The overall cost for comparison is
• if planning permission is approved already – consider how long this is valid
5.8% APR for – is it sufficient?

The actual rate and fee will depend • the site must have unrestricted third party access from a public road
upon your circumstances. Ask for a
personalised illustration.
When your home is nearing completion
you will be required to convert the
bridging loan to a Danske Bank
residential repayment mortgage or
repay the loan.

A Danske Bank personal current account will be required to service your mortgage.

APR stands for ‘annual percentage rate’. It aims to give people a more accurate idea of how
much money they are being charged when they borrow money. It allows people to compare
the total cost of borrowing money for different types of loan, and lengths of time.

No higher lending charges apply, but other fees and charges such as solicitors’ fees may apply
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
which are not charged by us or paid through us.

3 4
 Things to Consider
for the Build
2. Project Planning
Who is going to design the house?
One of the first decisions you need to make, is which architect you are going to use.
Things to consider when choosing an architect:
• ask around, architects receive most of their work through word of mouth
• check that they are registered with Architects’ Registration Board
• check references, ask local planners. It is important to choose an architect that
matches your style and has a good track record
• it is good at this stage to get a rough cost from each architect on the
approximate cost of the build
• all professional fees must be met up front from your own funds, so consider
these costs when working out your budget
5 6
Things to Consider
for the Build
3. Working out the costs
When working out a build budget, there are a number of things to consider.
It is important to spend time getting this right:
• choose architect, get costings for drawing up the plans and for submitting them
• choose how the build will be supervised, choose a builder, get quotations –
remember it is important to get a few quotations before settling on a figure, check
their work. Once you decide who to use, you should obtain a written/fixed price
contract - do not accept a verbal agreement
• find out what warranty/structural guarantee will protect the home once built
• planning fees, Discharge of Effluent, Building Control application costs
• survey costs
• exterior and interior furnishings
• solicitors costs
• check any materials being used are covered by the appropriate guarantees
• costs to connect utilities to the property e.g. electricity, water, phone lines, gas
• consider the costs of alternative accommodation
• it is easy to overspend when building a property - this can be due to delays or
unexpected costs, therefore a 10% contingency fund should be included in your
budget for unforeseen overruns
• VAT costs
To help speed the process up, it is important that you bring the correct documentation
to your interview. Details of the documents you will require are listed in the Bridging
Loan Checklist on page 12.
 Things to Consider Step by step guide to
for the Build building your dream home

Reclaiming VAT 4. Find out how much you can borrow

New houses are zero rated for Value Added Tax (VAT). This means that if you are
building your own home, you can reclaim some (but not all) of the VAT incurred during
the build.
It is important that you read and understand the rules of VAT reclaim as claims need
to be made within specified time frames. For the purposes of the application, you must
ensure to allow for VAT costs as part of the build.
VAT rates are subject to change.
For more rules and information go to www.hmrc.gov.uk/vat/sectors/consumers/
new-home.htm
When deciding how much you can borrow, we will take into consideration how
much you earn, your financial history and existing financial commitments. Our
specialist Mortgage Consultants will discuss the following at the first meeting:
• a financial budget to assess affordability for both the bridging loan and
for when the build is completed and a residential repayment mortgage
may be required
• provide and explain the documentation required
• discuss how much is affordable

• discuss the costings, valuations and fees associated with build

• explain the features and benefits of the product

• go through the application process and what happens at the end of the build

• consider how much you are able to put towards the build
(also known as your ‘stake’)

You can get full details of fees, service charges and interest rates that may apply to the Danske
Bank personal current accounts from all Danske Bank branches in the UK and on our website
at www.danskebank.co.uk.

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 Step by step guide to
building your dream home
5. Applying for a Bridging Loan
Once you are ready to complete your application and have collected the required
documentation, we will make a second appointment with one of our Mortgage
Consultants. This meeting may consist of the following:
• reviewing the documentation for the application (please see the Self Build
checklist on Page 12)
• agreeing stages to release funds and how much will be required, as decided
with your NHBC Builder or Architect. An example of these would be:
1. On completion of the footings and foundations
2. Construction of the walls and roof
3. Completion
• go through financial proposition and review affordability
• arrange a valuation of the build from the plans, which will include the value of
the current site
• when assessing affordability, your Mortgage Consultant will consider
affordability for both the bridging application and conversion to a residential
repayment mortgage - this will include upkeep costs of the property
• submit the application for credit assessment
An independent professional valuation may be required
9 10
Step by step guide to
building your dream home
6. Protecting the Build
Your home is probably your single biggest financial commitment, so it makes
sense to prepare for the unexpected. At Danske Bank, we have a range of ways to
help make sure that your family and property are protected for the future. You can
ask for more information during your mortgage interview.
Life & Critical Illness Cover
At Danske Bank, we can provide you with advice on Life and
Critical Illness cover:
• Life Insurance Cover – designed to repay your bridging loan in the
event of your death
• Critical Illness Cover – designed to repay your bridging loan in the event of you
being diagnosed with a specified critical illness and being eligible to claim
For full details and a personalised quotation, please ask your Mortgage
Consultant who will be pleased to provide you with recommendations to help
meet your individual needs. Insurances are subject to eligibility. Further
information can be provided separately.
If you have a mortgage, you must have adequate buildings insurance in place.
You do not have to arrange this cover through Danske Bank.
 Step by step guide to The things you need to
building your dream home know about

7. Completion of the Build Bridging Loan Checklist

It is important that the property is finished to a habitable standard and that all relevant
documentation, certificates and sign offs on the build are obtained, such as:
- Certificate of Completion
- Building Control Completion Certificate
- NHBC 10 Year Guarantee/Architects Warranty
8. Arrange mortgage appointment to discuss
funding options once the build is complete.
When your home is nearing completion you will be required to convert the bridging
loan to a residential repayment mortgage or repay the bridging loan.
Our Mortgage Consultants will be happy to provide advice on the best option for you.
The following items are required for Bridging Loans
Item Documents Required Checklist
Planning Permission (both outlined and full)
Fixed Price Contract - Where there is no Fixed Price Contract, please
provide detailed costings with a letter from the surveyor/architect
confirming that these are realistic and written formal agreement for the
work from the Builder
House plans with stamp attached
Building control approval
Discharge of Effluent Certificate
Confirmation that the builder is NHBC registered – NHBC certificate and
‘All Risks Constructors Insurance’ (or equivalent)
If the builder is not NHBC registered, please obtain a letter from the
Architect confirming:
- They are properly registered
- They will provide the Bank with a copy of their Public Liability Insurance
(this must be adequate to cover the costs of the build)
- They will oversee construction of the property
- They will issue interim certificates in respect to stage payments and
the amount spent to date on the property
- They will issue the Final Architect’s Certificate

If a NHBC registered builder is not being used, you must obtain Course of
Construction Insurance and a copy of this is to be provided to the Bank
• Name and address of Solicitor
• Address of the new property

When the build is complete, if you decide not to convert to a Danske Bank residential repay-
Please note that all of the items detailed above may not be available at the first
ment mortgage you will be required to repay the outstanding capital to us.
interview but they will be required prior to the release of funds
11 12
Over to you

Speak to one of our specialist

Mortgage Consultants today
in branch or by telephone.

Call us on
0800 389 0833*

*Lines are open between 8am and 8pm Monday to Friday and between 9am and 4.30pm on Saturdays, except for
bank holidays or other holidays in Northern Ireland when the bank is not open for business. We may record and
monitor calls for your protection, to train our staff and to maintain the quality of our ongoing service. Call charges
may vary. Please refer to your phone company for more details.

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Registered in Northern Ireland R568
Registered Office:
Donegall Square West
Belfast BT1 6JS

Danske Bank is a trading name of Northern Bank Limited

which is authorised by the Prudential Regulation Authority
and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority.

Northern Bank Limited is a member of the Danske Bank Group.

www.danskebank.co.uk

This publication is also available in

Braille, in large print, on tape and on disk.
Speak to a member of staff for details.

Correct as at 10/2014 COM1940 28434UK