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Simply complete the form below to get your free quote....

As an independent home loan broker our job is to get you the finance that fits your needs best. Various banks such as Absa, FNB, Nedbank, Standard Bank and SA home loans offer building loans, but there are other financial institutions that do construction loan financing as well.

If you only approach one of the big 5 banks, you would be severely limiting your options. Your bank for example might not be keen to give you a 100% loan whereas other lender might be less strict in their qualifying criteria. You could qualify for better interest rates, but your bank will not tell you if a competitor had better financing terms and conditions.

This is where an independent home loan broker (bond originator) can help you save money by getting a quote from several lenders. A home loan broker works for YOU and not the banks and their main objective is to get you the best deal on the market.


Listed below are frequently asked questions about building loans. These FAQ's are also relevant to owner building construction loans

What Types of Building Loans are Available? +

I’m sure you didn’t know that there are at least 4 different types of building loans out there. These are the various options when it comes to building namely: renovation loan; plot & plan; turnkey and building loan for a new home.

A renovation loan is pretty self-explanatory. This is where you have an existing property but wish to extend it. It’s not as simple as taking a second bond on your property. Many people choose to use the equity in their home (equity is the money available between the value of the home and what they owe the bank on their home loan), however, if you haven’t lived in the home for long there may be no equity. So what now? That’s where a renovation loan comes in.

You would need to get plans drawn up, quotes from a builder etc to show the additional value the extensions are going to make to the house because the bank won’t give you more money than the house is worth.

Plot & Plan and Turnkey building loans are quite common in rapidly expanding areas. This is usually where new residential developments take place. These are normally apartments, townhouses and free standing houses that all look similar.

When you buy an apartment you don’t have to worry about a building loan, because the builder has to finish the whole block first and you only start paying when you can move in.

When it comes to buying a townhouse or free-standing house and you buy it off-plan (off plan means before it is built) this is where you would be signing a building contract.

When a property developer offers plot & plan there are already four to five house layouts that are available which you can choose from, so you won’t need to worry about appointing an architect to draw up plans.

Let’s say you have purchased a plot & plan that costs a total of R800 000 – the plot is R300 000 and the building work is R500 000. The first step that takes place is that the plot is registered in your name.

This means that you will already start paying back a home loan on the R300 000 for the plot.

Once the building work starts, and depending on the bank that approves your bond, there will be 4-6 withdrawals from the bond account as the building work goes on (more on withdrawals later). As withdrawals are made from your building bond you are going to have to start paying more and more on your bond.

So you need to do your calculations because you’ll still have to pay rent where you are and start paying a building bond at the same time.

When it comes to a developer that offers a Turnkey option you have less to stress about. The selling price of a townhouse / house as a Turnkey option in a new development usually costs a little more, but instead of you paying interest installments on the plot and paying more and more as the building work continues, the developer takes on the costs of the building work right to the end, and then you only start paying when the building work is completed.

Ordinary building loans are when you buy a plot that is usually not as part of a new development. At some future date you decide you want to build a house on that plot. You would need to appoint an architect who would need to draw up building plans. These plans need to be submitted to the local municipality who have to approve it.

You would then need to get a building quote from a reputable builder who is registered with the National Home Builders Regulatory Council (NHBRC). Remember, the bank won’t approve a building bond if the builder quoting on the work is not registered with the NHBRC.

The same process of withdrawals, like in the plot & plan scenario above, from the building bond will take place as the building work continues.

Who Gets Paid... How & When is the money distibuted?... How does it affect my repayments? +

The bank will not make payments to the owner of the plot, so you don’t get the money and use it to pay the builder. The bank will only make payments to a builder who is registered with the NHBRC.

A withdrawal from the building bond is usually just called a ‘building draw’. This usually happens in 4 (sometimes 6) stages.

Most common practice is as follows:

Draw 1: Foundation completed

STEP 1 - Bank’s valuator comes out and signs off that 25% has been completed

STEP 2 - Bank makes payment to builder.

STEP 3 - Client starts paying a monthly instalment on that amount. In our example above, the client would now be paying on the R300 000 for the plot, plus another /- 25% of the building quote (R125 000)

Draw 2: Window height

STEP 1 - Bank’s valuator comes out and signs off that 50% has been completed

STEP 2 - Bank makes payment to builder.

STEP 3 - Client’s instalment on the building loan increases as he owes more.

Draw 3: Roof Height

STEP 1 - Bank’s valuator comes out and signs off that 75% has been completed

STEP 2 - Bank makes payment to builder.

STEP 3 - Client’s instalment on the building loan increases as he owes more.

Draw 4: Completion

STEP 1 - Bank’s valuator comes out and signs off that 100% has been completed

STEP 2 - Bank makes final payment to builder.

STEP 3 - Client’s instalment on the building loan is now at the full total cost of the project – the building loan now becomes an ordinary loan and the client pays off the home loan normally. No further increases will occur providing the reserve bank’s interest rate stays the same.

So there you have it. You now know what the different types of building loans there are in South Africa, how they are calculated and repaid.

Should you need any assistance in obtaining a building loan please do not hesitate to contact us. With experience in more than 100 building loan transactions, GPF Mortgage is in a position to help you build the home of your dreams.

Who Are You?

With more than R800 million of home loans arranged, Zulika van Heerden has been making the process of buying a house easier for first time buyers. Her expertise in the home financing industry allows her great leverage in negotiating the best home loan interest rates with various banks and direct lenders across South Africa. For her customers, this means the best possible value in rates, terms and conditions for their specific home financing needs. This could result in hundreds of thousands of rands in savings throughout the years of home ownership.

She has a proven track record in helping first time home buyers getting a home loan even if they have ONE CENT for a deposit, bond registration and transfer fees. She totally removes the money-stress when it comes to buying a house. Zulika has over 15 years of industry experience to assist you through the emotional experience of buying a house


Simply complete the form below to get your free quote....