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Building Home Loans in South Africa
Building Loans - There are times in life where you just cannot find that home you have always dreamed off. You have looked at thousands of homes and frankly, you think that designers in this country just do not cut it! Well that is when most people decide to build a home. Building your home allows you to choose what you would like your place to look like. A building loan is merely a structured approach to paying out a home loan. Remember that with all building home loans, there is a land portion; often vacant land, that must be paid for, and a construction that needs to take place for the actual house, which also needs to be paid for.
Building Loan Process
Customers should take particular notice of all the conditions stipulated by the bank in the Building Loan agreement, which will be signed at the attorneys before registration of the bond. If you are unsure of any conditions, speak to one of our Building Loan consultants.
· Only once your Building Loan has been registered and transfer of ownership of the property has occurred, should the building construction process commence. Please note that no progress payments from the loan amount can be made prior to registration of the bond.
· Initially the bank will only allow disbursements to cover the purchase of the property/vacant erf or portion thereof, depending on the amount of loan granted.
· Thereafter funds will be released over a series of progress payments as the building process progresses based on a costto- complete basis. This is to ensure that sufficient funds remain in the loan to complete the project.
· A maximum of 6 progress payments will be allowed, unless the customer applies for additional progress payments, due to the extent of the tender amount or the difficulty/size of the dwelling to be constructed. Any payments processed in excess of 6 progress payments will however attract an operational fee, which the bank will recover from the customer.
· Remember that once funds are paid from your Building Loan, you are required to make regular monthly repayments based on the interim interest charged on these amounts for the period of the building process. Capital and interest repayments only become payable upon completion of the building or if the building term exceeds 12 months, capital and interest become payable on the 12 month build period expiry (Unless the customer has obtained approval from the bank to extend the building period). If for any reason there is a delay in the completion of the building, it is your responsibility to contact the bank as soon as you are aware of this.
· The bank must also be notified of any deviation from the tender, plan, change in builder selected and specifications submitted initially as this could affect the loan amount approved and ultimately the assessed market value of the property. The bank needs to, under such circumstances, pre-approve the deviations/changes once the loan has been fully re-assessed.
Building Loan Policy
The project must be enrolled with the NHBRC (National Home Builders Registration Council) which provides automatic cover over structural defects for a period of 5 years after effective completion of building work.
· The contractor or subcontractor and his/her team must be NHBRC registered. The Banks Home Loans departments will NOT finance - owner-builders.
· Unconventional construction methods will not be considered, unless prior approval is received from the banks Property Valuations Department.
· Building operations must commence within 3 months after registration of the loan and must be completed within a further 9 months thereafter.
· The building contractor must carry Contractors All Risk Insurance and proof thereof must be submitted to the bank.
· A property valuer will inspect building progress at least 3 times, and possibly 6 times during the course of the project and will report accordingly. The bank will however require a progress inspection with each progress payment request received.
Complete the short form, and one of our experienced consultants will contact you to answer all your questions and give you sound advice on your options.