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There is help for first time home owners

by | Oct 1, 2020 | Personal Finance

Owning a home is the dream of most people, and working towards it gives one a sense of purpose. Yet, getting a home loan and the deposit together is often a very daunting task and can discourage many people. However, there is help for first time home owners.

Very few people are aware that if you are a first time South African home-buyer, there is a government programme called the Finance Linked Individual Subsidy Programme (FLISP) that can help you.

The Western Cape Department of Human Settlements explained the following about FLISP.

The programme is designed to help clients to pay for their first residential property. This can be an existing home or a vacant plot where they plan to build their house.
It must be noted that the contractor building the house must be registered with the National Home Builders Registration Council.

The FLISP subsidy is paid to your bank or financial institution and will reduce your monthly loan instalments, making it more affordable to purchase a home.
The funds can also be used as a deposit to cover any shortfall between the approved home loan amount and the purchase price. It is important to note that this subsidy cannot be used to pay costs such as transfer and bond registration fees.
The amount of the subsidy ranges between R27,960 and R121,626, and depends on your income.
The table for your income and the subsidy you qualify for can be found on the Western Cape Department of Human settlements website

What do you need to qualify for the subsidy?

  • Be over 18 years of age
  • Be a South African citizen (or permanent SA citizenship)
  • Earn between R3 500 and R22 000.
  • In addition, you must not have received a government housing subsidy, or have owned fixed residential property before.
  • Be married or co-habiting
  • Or be single with financial dependents

 

How do you apply?

First apply for a home loan from your preferred financial institution / bank before you apply for the programme.
Once your home loan is approved, an FLISP application can be discussed with your bank, financial institution or the Department of Human Settlements to fill out a FLISP application form.

What if your home loan application was not approved?
According to the department’s website, if the home loan application is declined by the bank, then you will not be able to get the subsidy.
You can also apply if your bond was registered in the last 2 years.

What documents do you need to apply for FLISP?

To apply for the programme the following documents must be presented:

  • RSA bar-coded identity document (ID)
  • Bar-coded permanent residence permit (where applicable)
  • Birth certificates/RSA ID’s of all financial dependents (where applicable)
  • Proof of guardianship of foster children (where applicable)
  • Marriage certificate (where applicable)
  • Final order of divorce (where applicable)
  • Spouse’s death certificate (where applicable)
  • Proof of income
  • Home loan approval in principle
  • Grant letter from an accredited lender.
  • Agreement of sale
  • Building contract and approved building plan (where applicable)
  • Statement of transfer costs from conveyancer indicating transfer and bond registration costs (where applicable).

 

If you are from the Western Cape and your home loan has been approved, you can:

  • Visit 27 Wale Street, Cape Town
  • Call the Help desk on 021 483 6488 / 6411/ 8984/0623/2060
  • Email: Human.settlements@westerncape.gov.za
  • Or visit the website www.westerncape.gov.za/dept/human-settlements

 

More about home loans

  • Think about what you like, what you don’t like, where you would like to live and where you don’t want to live.
  • Find out the value of the property in the area that you are interested in
  • Visit different banks and financial institutions and compare home loan rates and home loan providers for the best possible deal
  • How much deposit, how much you borrow and your repayment terms are key factors in your home loan
  • Ordinarily you are required to pay back your home loan amount, plus your interest
  • Most common terms for home loans are between 20 and 30 years
  • You stand a better chance of being approved for a home loan if you have regular monthly income
  • Amongst other things like age, income, job stability, credit history and debt – affordability is one of the most important factors a loan provider will take into account when they consider your application.

Most loan providers will also not approve a home loan if the repayments are more than 30% of your single or joint gross monthly income.

So, there is help for first time home owners. A home of your own gives you a sense of of permanency. It also gives gives you and asset to pass onto your children or to use as collateral for further business ventures.
Work towards your deposit, but more importantly work towards responsibly paying your debt and getting your credit score up – so that you stand as good a chance as possible of realizing the dream of owning your own home.

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