Rather than buying a new home, my husband and I thought we would get the finance to build a home of our own on a piece of that my family owns, but we have no idea about how this process works. Is it the same as a regular bond application process? What do

Lizette Marais, ooba’s Mpumalanga sales manager answers:

Building a new home is an exciting and challenging prospect. The first thing you will need to do is work out how much you can afford. This part is the same as applying for a regular home loan – you will need to produce a salary slip and six months’ bank statements, and fill out an assets and liabilities form, and calculate your monthly expenses to work out the surplus that you have to spend on your bond repayments.

Most banks won’t grant a bond for which the monthly repayments total more than 30% of your gross monthly income.

You can use the home loan calculators, as well as other home finance calculators to work out exactly how much you can afford.

You should hire a developer or architect to manage the process for you, and they will call in the services of an NHBRC-registered builder or work with a builder that you have identified. The bank will not release the funds if the builder is not NHBRC registered.

These parties will then draw up plans and a quotation in line with your budget – some negotiation may be necessary at this point – and you can then apply for the loan in line with your plans.

Remember that very few building projects go according to plan, so always leave some contingency for unexpected expenses.

Building payments are made in a series of steps, and for the bank to release the funds to the builder at each stage, you will have to sign a document stating that you are satisfied with the progress. The bank retains a final sum – the retention amount – until the building is completed to your satisfaction.

As with any other home loan application, the ooba experts are available to guide you through the process and send your application to a number of different banks to increase your chances of approval and to secure you the best possible interest rate.