Thursday 14 August 2008

MAKING DRAW DOWNS ON A BUILDING LOAN


I think most people really struggle when it comes to how the banks pay builders when you have a building mortgage or bond.
Mortgage Originators understand this, but often this is lost on the client until its too late.
So here are some tips, hints, tricks etc from your favourite SA property info site!!!
TAKE CAREFUL NOTE OF THE ITEMS IN RED.
ALWAYS READ THE SMALL PRINT!!!!
BUILDING LOAN/MORTGAGE - If you have paid for the land and now want to start building, make sure if you have an ACCESS type bond, that you move your access money into a different bank account while the building bond starts, else it will be frozen. Bummer.
PAYMENTS - PROGRESS PAYMENTS
Your builder will want payments for work that he has done. This is called progress payments.
The lending bank, will make these payments to the builder:
1. After receiving a signed request form to release funds from you. You can get these at any branch or ask your mortgage originator to get them. Make sure it gets to the bank 5 days before the money is required.
2. The payment will be based on the estimated cost of building work completed.
3. The lending bank will always calculate this payment and ensure that sufficient money is retained to complete your building. - They look after you.
4. This retained money is calculated by the banks. They value the work against the building contract.
5. Remember, get a reputable builder BECAUSE the bank will not pay for poor workmanship nor will they pay for building material on-site.
6. The bank WILL ONLY pay on the assessors amount not what you or the builder estimate (So dont ask for more than what has been done).
7. Never, never, never - sign a blank progress payment form and give it to the builder.
8. Its good to have a solid honest payment relationship with your builder, because he will always want payments. YOU ARE RESPONSIBLE FOR THIS - NOT THE BANK.
9. Normally 3 to 4 progress payments to complete your mansion.
SO IS THIS ALL I AM LIABLE FOR; OR ARE THERE OTHER COSTS RELATED TO PROGRESS PAYMENTS? YES YES YES YES YES
NOTE: Interim interest is calculated on each of these progress payment amounts. This is over and above your loan.
WHAT TO DO:
1. Because part of your original loan money will be used up by interim interest you may not have enough money from your loan.
2. Make some partial payments to cover the interim interest as soon as the first progress payment has been made by the bank.
3. Or you must save some money and keep this as a provision to cover the interim interest since this can add up over the building period.
4. Dont get caught having to find a portion of the final progress payment from other funds.
SHORTFALL? YES/NO
Progress payments may differ from the actual cost versus the banks estimated cost.
Keep some funds available right up front before you start building, to overcome a possible shortfall.
Why the shortfall occurs is normally due to:
1. Loan you request is less than the contract price.
2.The builders contract price is LESS than the banks estimated cost to complete the building.
So remember that the bank, in the case of a shortfall, will insist that you have funds from other sources and these funds must be applied to the property prior to the Bank considering progress payments against the bond.
FINAL PAYMENT
When the builder completes the contract and asks for final payment:
1. Check that you are 100% happy.
2. Only then sign off your happy letter for the bank.
3. get your certificate of occupation from the local authorityIn addition, a signed copy of the certificate of occupancy, which is obtainable from the local authority
4. Lastly CHECK if the banks requested anything else when they granted your loan.
READ the SMALLPRINT
Then the last payment will be made.
Simple - HA! Never. Enjoy your mansion.

Tuesday 12 August 2008

The Light on the Horizon






Rest assured
that not to far
into the future:







Property prices will taste like honey
Interest rates will make you laugh again dear
The banks will love lending you money
The radio station will play songs you like to hear.

used Car prices will come down
The rand will rally against the pound
Oil prices will remain the clown and
Property values will gain ground

THIS TOO SHALL CHANGE - HANG IN THERE FOLKS!!!!

Sunday 10 August 2008

If It's All About Credit - Clear Your Credit Record!

It's ALL about credit!

It's ALL about credit!

It's ALL about credit!


We know this, so why aren't we doing anything about it?
Why are the number of declines with regards to submissions for credit applications increasing every month? WE DON'T LOOK AFTER OUR CREDIT PROFILES!

Times are a little rough and with the Credit Act taking total control of any credit applications, whether it be home loans, credit cards or vehicle finance, financial institutions are having to abide by their rules. So people, lets get with the program and abide by the rules! There's nothing worse than finding the house of your dreams only to find out that you can't get a home loan because you haven't bothered making a little bit of an effort.

So what you need to do to ensure FINANCIAL SUCCESS?

  1. Check Your Credit Record - Click here for your ITC & Experian credit check
  2. Check for judgments & credit listings
  3. Contact the companies/people who have listed you and arrange to remove them
    1. Often listings are old because the bureaus just forget to remove you
    2. Often listings are old because the companies you listed you haven't bothered contacting the bureaus to have to removed
  4. If you pay off outstanding debts, make sure you keep proof of payment (this will be required by financial institutions from time to time
It's easy and it really doesn't take much time.

Things to remember which will assist you in keeping track of your credit records. The banks have systems that link into the bureaus which show you credit profiles for clients. Credit profiles allow the bureaus to link into all financial institutions that offer credit eg Edgars Accounts or Credit Cards;
  • Don't pay your accounts late
  • Don't miss payments
  • Don't let debit orders go off your accounts without having funds available
Well that's that for now and I hope this helps you all. Truth is you want a clean credit profile and so do we :)

Keeping SA Credit Clean!!!
HAVE A SUPER WEEK!