Subsidies available for low-income home-buyers

Do you know that, if you are a first-time home-buyer, you might qualify for a government housing subsidy?

The Finance Linked Individual Subsidy Programme (Flisp), a government programme to help first-timers in the property market, is available to people who earn up to R15 000 a month. It works on a sliding scale, so the less you earn, the higher the subsidy.

The subsidy is no longer subject to a ceiling on the purchase price of the property. (Until October 2014, the maximum purchase price was R300 000.)

The once-off subsidy is not large - the minimum is R20 000, for people who earn R15 000 a month, and the maximum is R87 000, for people who earn R3 501 a month - but even a relatively small amount paid upfront into a mortgage bond can translate into a substantial saving over the term of the bond, or help you to cover a deposit.

Meyer de Waal, a Cape Town property lawyer who educates people about property ownership, provides the following example: "If a R20 000 subsidy is paid into a bond of R500 000, you can save almost R100 000 [over the term of the bond] and reduce your bond term from 20 years to just under 18 years. Similarly, a subsidy of R40 000 awarded to a qualifying homeowner with an income of R11 700, who may qualify for a home loan of R400 000, may save more than R170 000 on bond repayments, and reduce the bond term from 20 years to 15-and-a-half years."

De Waal says that you can apply for a Flisp subsidy if you fall within the income range and your home loan has been approved. You may also qualify if you have already taken transfer of your home. (Each province has its own retrospective criteria in this regard: if you live in the Western Cape, you must submit your application within 12 months of having taken ownership.)

Other criteria are that if you are single, you must have dependants, and you must be over 18 and a South African citizen or holder of a valid residence permit.

Applications must be made through your provincial Department of Human Settlements. Note that applications are subject to funds being available within the constraints of the provincial department's budget.

In the Western Cape, De Waal says the Department of Human of Settlements requests that you submit Flisp applications by the end of March, because it has available funds in the current budget.

The department will also relax its income criterion by assessing your income at the time the bond was approved, not on date of the application.

Visit www.flisp.co.za for more information or to apply.

Article courtesy of Personal Finance