You apply for a building loan with a lender, such as a bank, just as you would for a home loan.
As with a home loan, you will require a good credit record in order for the bank to agree to lend you the money. You will also require cash for an upfront deposit, which will usually be 10-20% of the building cost.
But there are a few other requirements that make applying for a building loan a bit more rigorous than applying for a home loan.
These requirements are:
- Provisional drawings for your house, including plans, sections, elevations, and a site plan. These will usually be drafted by an architect.
- A building contract, signed by you and your chosen builder or contractor. This document will include details of the building materials being used, the budget assigned to each portion of the project, and plans approved by the municipality.
- Proof of the builder’s registration with the National Home Builders Registration Council (NHBRC).
- A lien waiver provided by the builder. This basically means the builder is waiving all rights to the property and any materials and labour used in its construction.
Bear in mind that, unlike a home loan, a building loan is not provided all at once, but rather in stages, with a certain amount being advanced at each stage of the construction process.
Whether building or buying a home, applying for a home loan with ooba Home Loans will enable you to acquire the best possible deal, as we submit your application to multiple banks on your behalf.