Today we will briefly discuss the Absa construction loan in South Africa.
If you have a construction project and only lack financing, you can turn to Absa for a construction loan to help.
The loan includes the cost of vacant land or just the construction cost if you already own land.
How Much Does Absa Construction Loan Cost
The loan is calculated on the market value and not the replacement value of your property as if it is complete.
The loan accounts for 60% to 90% of the contract price, so you have to pay a deposit and the shortfall for some construction costs.
You have to pay approximately 10% or more of your contract price as the initial payment to your builder.
You will pay for deposits for building materials like cupboards, aluminum doors, and windows as your loan does not cover them.
You will have to cover the short-fall if you do not have a 100% bond.
This is the cost of the Absa construction loan in South Africa.
Absa Construction Loan
If your loan includes the cost of land, you need first to register a bond, and then your loan will be paid by way of progress payments as the construction work progresses.
The number of progressive payments is determined before you start your construction and is usually not more than six payments.
A valuer will be sent to inspect your construction once you request progress payments to ensure that the construction work complies with the Absa requirements and is at the right progress.
Interest is calculated from when you make your first loan payment, usually during your land registration.
This is how the construction loan works in South Africa.
How To Ask For Progressive Payments
The builder you have assigned your construction will ask you for a progressive payment when they are in need.
Ensure that the required work has been completed to a standard that was agreed upon between you and the builder before getting another payment.
Complete the progress payments form from Absa and email it to email@example.com for validation.
The bank will assign a valuer to inspect your construction, and then the funds will be sent to you.
This is how you request progress payments for your Absa construction loan in South Africa.