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Housing and You…Now that the mortgage has been approved
By Leonard Gildarie
The recent death of Nelson Mandela, the South African hailed as one of the greatest human beings of the last century, has driven home the need for things to be done differently.
The traditional way of doing business has all changed with technology and the changing face of the world.
Over the past year or so, there has been a lingering theme which includes forcing the contractor to think differently, do things another way. I even suggested doing some of the work yourself to save money. Buying materials in bulk, all at once, can save on transportation and time.
Even extending your home by a few inches will impact on the cost
We spoke recently of the estimates form that any commercial bank will willingly give you a copy of. This can be used as a valuable guide to track how much is being spent on the home.
That reminds me. It would be a good idea to invest in a journal…even a notebook will do, or for the more modern of us, a PC or Laptop could work.
I am especially directing these articles to the folks who will be drawing down on their first mortgage. If you will be working on a tight budget every cent counts, and costs can escalate if instead of buying that toilet bowl, you decide to buy a Jacuzzi…stick to the plan.
DETAILED RECORD
You need to keep a detailed record of every dollar that is spent, since the bank or NBS would only be releasing what has been approved.
In other words, if you have budgeted $1M for the foundation, according to the Summary of Estimates which you would have submitted at the application stage, strive to ensure that this will suffice.
It cannot be emphasized more, the need to stick to a budget. Every section of the building, from foundation to painting, will cost you. That is why, in the initial stages, you have to sit down with your contractor or somebody knowledgeable to work out those estimates. Every pin (read nail) that is to be bought, will have to be included in the summary form.
Even extending your home by a few inches will impact on the cost. It happened to me when for some strange reason my contractor poured foundation and it was short by six feet.
Last week I indicated that we will be delving into the scenarios that will play out when you have applied for your mortgage and it has been approved. The applicant will be required to sign an acceptance form, which in the case of New Building Society (NBS) is then dispatched to the society’s lawyers, along with the Original Transport, and Certificate of Title or Lease. At this point, the applicant is expected to pay the legal fees.
In relation to NBS, for up to $4M, the legal costs will be just over $45,000 while it can reach over $90,000 for an $8M mortgage.
Upon the payment of these fees, the lawyers prepare the mortgage documents which will be signed by the applicants. These documents, which basically prevent the landowner from selling it without permission from the bank, are then filed at either the Deeds or Lands Registry. This process can take a few weeks.
In the case of Transport matters, these have to be advertised in the Official Gazette, where a mandatory two-week claims and objections period becomes necessary.
Regarding Certificates of Title, the lawyers for the banks or NBS will uplift these when they are ready and forward them to mortgage departments. Within days, the applicant is informed and the funds are made available for disbursement.
TRANCHES
If you are applying for a mortgage, none of the banks will disburse the entire amount that has been approved. For example, for an $8M mortgage, the monies could be released in $1.5M tranches, starting with the foundation. And then these tranches are only disbursed once the lending institutions are satisfied that you have completed those phases, according to your estimates. Not building to the estimates can, and will, cause the release of monies to be delayed.
One more thing. You will be required to take out insurance for the property. This can average around $40,000 annually for a mortgage of $8M.
Be safe on the roads for the holiday and drop an email at [email protected] or call 225-8491 if you have any comments.
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