A building loan is quite different to obtaining a bond to buy an existing house and it is as well to be prepared before you start the process in order to minimise delays and get building as soon as possible.
Vania van Dalen of BondApply has been extraordinarily helpful in supplying all the information that you might need to get going. I would readily recommend Vania if you are looking to get that loan. She is extremely efficient at what she does and goes more than the extra mile.
For more information on what is involved, Vania has outlined all the necessary documents, procedures and processes below.
Description of the Product.
The Building Loan is a process linked to a new Home Loan or to a Further Advance, to assist customers with the construction of residential property or renovations/additions to an existing property.
With this Home Loan you can include the purchase of a vacant stand as well as the cost of building the residence on that property in a single loan.
Documentation to accompany your new loan application:
In order to apply for a Building Loan, banks require the following information:
• Fully completed application form (this can be completed by your mortgage originator)
• Your bar-coded ID document
• Latest salary advice
• The original document or a certified copy of one of the following documents verifying your residential address, not more than three months old: Municipal account, lease or rent agreement, Telkom statement, etc.
• Original document or certified copy of a South African Revenue Services document reflecting your personal details and income tax number (where issued)
• Copy of Contractor’s NHBRC certificate
• Copy of Provisional/Approved Plans
• Copy of detailed tender/quotations
• Minimum specifications and schedule of finishes
• Waiver of Builders Lien.
What are the features of the Product?
• During the building period, the bank pays funds to the developer/builder based on the work completed, against a “progress payment” requested by you.
• Repayment requirements only commence once the loan has been paid out in full (i.e. once building processes are complete), although we recommend voluntary payments are made earlier to cover interim interest (see below).
• Interest is charged on the daily outstanding balance and is capitalised monthly which means that interest starts accumulating as soon as the first payment is made – called “interim interest”. As a result, payments should be made to cover this “interim interest” as it is capitalised, otherwise there will be a shortfall on the final payment.
How does the Product work?
During the building process: There are normally three progress payments in the life cycle of a building loan – the final payment is only made once the work is completed in full.
• As the building progresses, payments are made to the developer/builder by means of progress payments. All progress payments must be authorised by the owner.
• An assessor will visit the site prior to payout of each progress payment.
• Interim interest is calculated on the daily outstanding balance and is capitalised to the account monthly.
• Repayments will only commence once the loan has been paid out in full. However you should make additional payments to cover the accumulated interim interest, which will eliminate any possible shortfall on the final payment (as such a shortfall will be your responsibility).
• Only the variable interest rate option is permitted until such time as the loan has been fully paid out.
For more information on building loans or to apply for a mortgage bond, click on www.bondapply.com or contact Vania van Dalen on 0829258751 at bondapply.com.