If you’ve been dreaming about building your own home, now is the time to make it a reality. Record-low interest rates combined with a reduced, steady repo rate means you can currently afford up to 30% more compared to last year.
How do you go about financing this build? Opting for a building loan instead of a traditional home loan to pay for the construction of your new house or renovations to an existing property is a clever option. Instead of receiving a once-off lump sum, the bank pays out the loan amount in stages or so-called “progress payments”.
To apply for a building loan, BetterBond suggests you prepare and tick off the following document checklist:
- Three or six months’ salary slips depending on your type of employment.
- Three months’ bank statements to verify your income and confirm monthly expenses.
- Include the plan and specifications of your building work, as well as an indication of what it will look like when completed.
- Schedule of finishes – a list of the materials that will be used throughout the house.
- National Home Builders’ Registration Council (NHBRC) certificate proving that your builder is registered with this regulatory body.
- Your building contract that sets out the scope and terms of work.
- Building quote that sets out cost estimates for the work to be done.
- Waiver of builder’s lien – a written agreement with your builder who gives up the right to place a builder’s lien on your property, retaining possession of it if there is a dispute over unpaid costs.
Now that you have all your documents ready, the building loan company can submit the building loan to the banks.
