What are Building Loans?
A construction loan is used during the building phase and is repaid once the construction is completed.
A borrower will then have their regular mortgage to pay off, also known as the end loan. “Not all lenders offer a construction-to-permanent loan, which involves a single loan closing.
Best Building Loans In South Africa
Absa Home Loan
Absa Home Loan includes an online management tool that allows clients to manage their repayments and access previously paid money.
Clients can also choose between fixed and variable interest rates. Absa provides mortgages of up to 100 percent of the purchase price. Young professionals are given a boost with mortgages of up to 105 percent of the purchase price.
Those with a gross income of less than R26,100 receive assistance in applying for FLISP (financially linked Individual Subsidy Programme).
The cash deposit fee for the mortgage account is R4.50 plus R1.50 per R100.00 deposited into the account. Account holders must pay an R69.00 monthly service fee as well as an R6,037.50 initiation fee.
Standard Bank Home Loan
The Standard Bank Home Loan has a repayment term of up to 20 years and a personalized interest rate. If your credit score and history are good, you may be able to get a lower interest rate when applying for a Standard Bank home loan.
Clients can obtain up to 100 % financing of the property’s purchase price. Customers who are approved for a Standard Bank Home loan must obtain homeowners insurance.
Loan approval is quick; clients can be approved on the same day they apply. Since there are no commission fees involved, applying directly online cuts out the middleman. Standard Bank Home Loan has a monthly service fee of R69.00 and an initiation fee of R6,037.00.
FNB Home Loan
FNB, also known as First National Bank, is a South African bank that provides a range of financial products and services to its customers, including home loans. The FNB Home Loan is a flexible and affordable solution for individuals and families looking to finance the purchase of a new home or refinance an existing mortgage.
With an FNB Home Loan, borrowers can access financing of up to 90% of the value of the property they are purchasing. This means that they will only need to provide a 10% deposit, making homeownership more accessible to those who may not have a large amount of savings.
FNB offers home loans with flexible repayment terms of up to 20 years, allowing borrowers to choose a repayment period that suits their financial circumstances and budget.
FNB also offers additional benefits to its home loan customers, including insurance options to protect their investment, as well as a range of convenient online tools and resources to help manage their loans. Customers can access their home loan account information and make payments online, as well as view their balance and repayment schedule.
Capitec Bank Home Loan
Capitec Bank is a popular bank in South Africa that offers a home loan product that is designed to meet the needs of different types of borrowers. This loan provides a flexible repayment period of up to 20 years, and the interest rate is determined based on the prime lending rate.
Nedbank Home Loan
Nedbank has one of the best mortgage offers in South Africa, with customers benefiting even before they pay their first installment.
Clients can receive up to R15,000.00 in cash back on the loan value. The cashback is, however, limited to one percent of the loan amount. Clients can also save up to 50% on the attorney bond registration fee when they apply for a home loan online.
Customers can choose between mortgage refinancing and mortgages from the bank. Nedbank can finance up to 100% of the purchase price of a home. Furthermore, the interest rate on the client’s home loan is reduced by 0.25 percent and the reduction is applicable to clients who use Nedbank as their primary bank.
The monthly service fee at Nedbank is R69.00, and the mortgage has an initiation fee of R6,037.00. The fee for cash deposits is R30.00 + R1.51 per R100.00 or part thereof.
How does a building loan work in South Africa?
With building loans, a portion of the loan amount is retained by the bank and the funds are given to the borrower in stages during the construction period. The bank only makes a progress payment against construction work that has already been completed.
What kind of loan do I need to build?
You can use a construction loan to cover the total cost of building a home, including the land, labor, materials, and permits.
The approval process for a construction loan is similar to that of a typical mortgage in that you’ll need to apply and submit documentation to your lender.