Owning a home in the course of the ongoing pandemic would be ideal because you wouldn’t have to worry about paying rent. According to our data, more people are thinking about securing their family’s future which explains why there is a high demand for maisonettes and bungalows. There is also an increasing demand for land for sale.
If you are looking for financing, then NCBA has a great construction loan just for you. We spoke to the Head of Business Development, Property Finance at NCBA, Stella Mutai to tell us more about the buy and build construction loan.
What is buy and build?
This is a product that enables customers to buy land and construct a home simultaneously. A customer can purchase a piece of land and undertake construction on the same piece of land both within the same facility.
1. What areas does this facility finance?
The areas include Nairobi & Mombasa metropolitans and major urban areas in Kenya.
2. What is the minimum plot size that NCBA finances?
The minimum plot size is 40ft. x 80ft. (0.072 Ha). This is subject to meeting the restriction on minimum plot size in the specified area.
3. What is the maximum financing available for NCBA customers?
Financing is available up to 100% of the combined plot and construction costs. This is facilitated by collateral replacement indemnity that covers amounts above standard bank financing.
4. What is collateral replacement indemnity?
This is an insurance product that enables the bank to provide up to 100% financing to prospective homeowners. It is calculated at 3% of the amount above standard financing and premium paid annually for the first 3 years.
5. Is there a loan limit for the facility?
The maximum loan amount is KES. 20 million. This is applicable in cases where the bank is providing funds above standard financing of the combined plot and construction cost.
6. What are the key construction documents required during loan application for a Buy & Build loan?
Below is a minimum set of documents required during facility appraisal:
a) Copy of title
b) Architectural drawings
c) Structural drawings
d) Bills of quantities
e) Architect’s & QS’ BORAQS practicing certificates
f) Structural Engineer’s EBK practicing license
7. Does NCBA have a panel of Architects, Quantity Surveyors, Engineers and contractors?
The bank only has a panel of Quantity Surveyors. Customers should identify and engage qualified professionals who are registered and in good standing with their respective boards.
8. Can a customer undertake a construction project without a contractor?
The National Construction Authority requires that any construction works undertaken is done by a registered contractor with a valid license. There is an exception for minor renovations/ finishing works that involve specialists and are non-structural.
9. Does the bank offer any grace period during construction?
NCBA offers a moratorium on principal for a period of up to 9 months. Customers only service interest on drawn funds during this period. This is to reduce the repayment burden on the customer during the construction period.