Are you interested to know how the Absa building loan work in South Africa? Then, read this guide to learn.
This facility will enable you to build your dream house or renovate an existing home.
We will first show you the documents needed to apply for the loan
What Is Required To Apply For The Loan
Here are the essential documents required:
- Building contract – this is proof of partnership between you and your builder.
- It also outlines the terms of the project with a detailed breakdown of all costs and works to be done.
- Bill of quantities – this is a detailed outline of the different phases in the building process.
- A quantity surveyor must sign off at each stage.
- Tender and schedule finish – a detailed list explaining the exact materials to be used and the required quantities.
- Building plan.
- A builders NHBRC registration certificate
- Absa minimum requirements outline the procedures to be followed when building your project.
- Waiver of builder’s lien, which gives the bank right to the property should you not pay back the loan.
These are the most important documents to present before the bank approves your loan.
Now that you know the required documents, we will show you exactly how the loan works.
How Does Absa Building Loan Work
Find a contractor registered under National Home Builders Registration Council (NHRBC) and sign a contract with them.
You do not receive the money at once, as with a home loan.
The bank (Absa) pays out the loan in stages as each construction process is completed.
The contractor has to fund the purchase of needed building materials and actually carry out the main construction work until it has reached a stage where the bank can make a progress payment of 10%.
Therefore, you should consider a financially stable contractor and with a contractor All Risk insurance cover.
This cover protects the builder, the borrower, and the bank against any loss or damage during the building period.
This is generally how the Absa building loan works in South Africa.
We will now show you the repayment plan of the Absa building loan.
How Does Absa Building Loan Repayment Plan Work
Interests are capitalized over nine months, so your repayments will start after the nine months.
The debit order for your repayment will be activated during this time, even if your home is not complete.
You are allowed to make six progress payments during the building contract period.
Interest accumulates from the first day the first progress payment was made.
This is all you need to know about how the Absa building loan work in South Africa.
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