How does building Loans work?

[Tiroom]

Hi All.
Does anyone have detailed knowledge of how the building loan work?
1. What is the building rate used by different banks?
2. Does the building rate estimate include the land?
3. How does it work if you own the land?
4. Can the bank offer you the money that you need not their estimate, if their estimate is more?
5. How does the shortfall work. Can you negotiate with the banks to reduce it?

 

[TheChamp]

Maybe you will get some advice if you post here https://mybroadband.co.za/vb/forumdisplay.php/168-Health-Wealth-Leisure-and-Relationships

 

[rietrot]

The banks normally give you a loan according to the contract price from the builder. I am not sure if you will get 100% sometimes they only give 90 or 80% That's were the shortfall comes in and you will have to finance that amout yourself. It is negotiable and if you already own the land it would count in your favour as the bank will do a bond. If you don't own the land you could include the land in the loan.
What do you mean rate? You will repay an interest rate close to prime just like a normal mortgage bond.
The banks normally require a builder registered with NHBRC and pay out the money in portions as the work progress.

 

[Gaz{M}]

1. Up to R6500 per square metre, I've been told recently. Beyond that, you must self finance. It is important to have an accurate building quote with all materials and allowances for finishes. Don't take any old guy that promises he can build for R4000 per square metre. It is a very over simplistic way to price a project. Get proper cost breakdowns.

 

[Tiroom]

Thanks for all responses. Anyone with experience on using Standardbank building loan? I own the land.

 

[Flame]

why this in adsl section?

 

[Lord Farquart]

why this in adsl section?

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