There Is Financing Available for First Time Buyers

First time buyers often struggle to enter the property market as they battle to come up with a deposit. What many don’t realise that they actually qualify for a housing subsidy from Government.  “It seems that most first time buyers aren’t aware of the fact that they likely qualify for a housing subsidy and it’s often only such a grant that makes buying that first home feasible”, believes Bruce Swain, MD of Leapfrog Property Group.

FLISP (Finance Linked Individual Subsidy Program) Requirements

FLISP is a once-off subsidy that ranges in amount from R10 000 to R87 000 based on the applicant’s income.

• Buyers have to be South African citizens and over eighteen
• Only first time buyers earning between R3 501 and R15 000 per month can apply
• Applicants cannot have benefitted from a Government Housing Subsidy before
• Buyers need to have Approval in Principal for a home loan from an accredited financial institution

Properties You Can Purchase with FLISP

• An existing, new or old, residential property
• A vacant serviced residential stand, linked to an NHBRC registered homebuilder contract; or
•  Build a residential property on a self-owned serviced residential stand, through an NHBRC registered homebuilder

A Quick Calculation

Let’s assume a buyer with a household income of R12,000 pm wants to  buy a property of R300,000 with no deposit, i.e. 100% bond (Prime plus 2% i.e. 11.25% over 20 years). Without a FLISP subsidy, the monthly repayment will be R3,148. With a FLISP subsidy of R37,650 (as determined by the FLISP subsidy scale which can be found on the www.flisp.co.za website) the required bond reduces to R262,650 and the monthly repayment becomes R2,753. The buyer will have a monthly saving of R395pm and R94,800 over 20 years.

If the purchaser keeps their repayment at the higher amount of R3,148, the bond would be paid off in approximately 13 and a half years, which would save a massive R211,981 in interest.

“Clearly a subsidy can make all the difference, especially for first time buyers and as Leapfrog we’d certainly encourage these buyers to get their applications complete and handed in as soon as they start house hunting as processing their application could take some time”, says Swain.