When it comes to securing a loan to build a new home, it is essential for the owner to provide a range of additional documents to the financial institution before the loan will be finalised or payments can be made to the builders.

According to The Property Factor’s Tess Rodrigues, anyone who wants to use bank finance to build a new property must provide copies of the plans, a copy of the tender and building contract, a certificate from the National Home Builders’ Registration Council (NHBRC) and a schedule of finishes along with a detailed list of specifications.

The other standard documents, such as an Offer to Purchase, identity documents of the owners and proof of income must also be supplied.

Should the bank approve the loan, the conveyancing attorneys then needs to have the mandatory FICA documents, a copy of the approved plans from the municipal authority, a building contract and a waiver of a lien from the builder, a copy of the builder’s insurance certificate and proof that the property has been enrolled with the NHBRC.

The owner of the property will usually be granted a bond based on the value of the land and the improvements to it, which normally includes the buildings. Thus if the bank grants an 80% bond it means that the owner will have to find the balance of 20% on transfer of the property and registration of the bond.

Rodrigues says that the first stage of building has to be financed by the owner and only after that will the bank allow progress payments to be made to the builder. The progress payment must also be authorised by a bank’s valuer who will assess the work done and its approximate value.

Rodrigues says that generally banks will make four or five progress payments to the builder but as soon as the first payment is made, the owner’s home loan account is debited and this amount attracts interest from the outset and must be paid monthly.

She warns that anyone considering building a home should be thoroughly familiar with the loan terms and conditions otherwise he or she might be stuck with an incomplete home that needs to be completed.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
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Email: morne@mortgagepluscc.co.za

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Did the recent strikes affect the SA residential property market?

The answer is very definitely “yes”, says Tony Clarke, MD of Rawson Properties. “Investor confidence, which had been noticeably encouraged by the World Cup event, has dropped markedly. Buyers are now adopting a ‘Let’s wait and see what happens next attitude’.”

The major overseas news media, both TV and newsprint, have, said Clarke, featured the strike in a big way and this has led to the perception that the government is a poor employer and that SA’s people like restraint and order.

“In at least two cases, I have seen foreign property buyers back off because of the strike.”

Particularly disruptive to the entire sales process, says Clarke, have been delays in issuing rates clearance certificates at the deeds offices and the Gauteng deeds office has proved to be among the farthest behind.

“We had grown to accept that a three-month delay was inevitable, but since the strike we now have to wait an extra 20 to 30 days.”

This, he said, had increased the number of distressed sellers because the hold-ups had made those who had expected to be paid for a sale wait longer for the cash – although already unable to pay their bonds.

In some, quite frequent, cases, buyers have moved in on the original transfer date leaving the seller to carry big holding costs, including unforeseen bond payments and rentals for a temporary home.

He says conveyancing attorneys, estate agents, as well as buyers and sellers have all been inconvenienced.

“In many cases, bridging finance, at high short-term rates that can equate to as much as a 40% interest, has had to be resorted to and developers holding costs, in particular, have also been very adversely affected – at a time when most are working on extremely small margins.”

Now that as the strike is ending, said Clarke, the property sector expects all deeds offices to improve the situation by taking on extra temporary staff.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za