To construct residential/commercial properties for sale, rental, or buy-and-build.
|Loan amount||• As per Bank Credit Risk policy with serviceability demonstrated from existing and projected income streams.
• Customer to contribute a minimum of 50% of gross construction costs as per Bills of Quantities (BQs).
• For buy-and-build the customer must contribute a minimum of 50% of the total costs (land plus construction).
• Internal Quantity Surveyor (QS) or one on the approved Bank panel to verify all figures and recommend disbursement installments.
|Repayment capacity||• Ability to service interest monthly during construction period
• Ability to pay at a minimum 3 months interest upfront or as required based on case by case basis where repayment ability is based on projected cash flows.
• Meet percentage of pre-sales agreed on.
|Security||• As per collaterals defined in the Bank Credit Risk Policy.
• Mortgage Protection Policy for the borrower.
|Maximum tenor||• 36 Months with a maximum grace period of 24 Months.
• Can be converted to a mortgage after the construction period with a door to door tenor of 120 months.
|Method of Repayment||Amortized over the tenor of the loan. Loan Repayment to include loan principal plus Interest amount. Moratorium on principal can be considered on a case to case basis|
|• Insurance over the developments
• Appointment of a bank approved project manager to act as technical eye of the bank.
• Disbursement shall be based on issued and validated Interim architects Certificates.
• Standard terms and conditions:1. Evidence of the borrowers’ contribution towards the construction cost to be evidenced.
2. Bills of Quantities (BQ’s) evidencing the total cost of development to be provided.
3. Copy of the construction agreement to be provided.
4. Copies of local council/county approvals to be provided.
5. Provide sufficient cover via contractors all risks insurance policy
6. Provide certificate of compliance from the National Construction Authority.
7. Evidence of payment of the construction levy of the contract.
8. Copy of performance bond issued by the contractor to be provided.
9. Proceeds of sale of any of the houses/building to be routed through the borrower’s escrow account with Horizon Bank including deposit paid.
10. If the facility is converted to a mortgage, borrowers to evidence source of repayments by providing the requisite rental agreements/leases.
11. Copy of title deed on which construction project is to be done.
12. Project feasibility report addressing key parameters of the project.
13. Professional team managing the project including qualifications and experience of key functions that include: project manager, project contractor, architect, quantity surveyor.
14. Approval of change of user if applicable.
15. Planned project implementation schedule with activities and their timings.
- Allows the borrower to acquire fixed assets without drawing working capital from the business