Many current new homeowners are unaware that, as first-time home buyers, they could qualify for a housing subsidy under the Finance Linked Individual Subsidy Plan (FLISP) grant.
“FLISP is initiated by the government to assist first-time homeowners in acquiring their own homes,” says Pugin .This is according to Verna Pugin, who works in association with My Bond Fitness and Consumer Housing Education, and recently conducted an investigation into FLISP subsidies.
Pugin says if first-time buyers need to investigate and make use of the opportunity. If they don’t they may be losing thousands of rands by not claiming the FLISP subsidy, as well as losing out on the prospect of reducing their home loan repayment and term, meaning they lose thousands more.
“FLISP is initiated by the government to assist first-time homeowners in acquiring their own homes,” she says.
“It is available to all first-time residential home buyers who earn between R3 501 to R15 000 per month and whose home loan has been approved, as a prerequisite, as well as current first-time new homeowners who have already taken transfer. Current new homeowners must apply for the assistance within 12 months of taking ownership.”
Pugin says the minimum FLISP subsidy is R20 000, and if such subsidy is paid into a home loan of R500 000 as a “once-off” payment, the homeowner can save up to almost R100 000 and reduce his or her home loan repayment from 20 years to almost 18 years, saving 2 years of home loan repayments.
“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 home loan repayments, and reduce the bond repayment term from 20 years to 15 and a half years.”
Pugin says the maximum purchase price of R300 000 condition was removed since 1 April 2014, yet few existing homeowners are aware of this opportunity to claim their FLISP subsidy.
“The benefit to a bank will be that an additional payment into a bond account will also reduce the debt risk for a bank, as it reduces the loan to value ratio,” she says.
“We suggest that clients approach their banks to reconsider and reduce the interest rate that is applicable to a home loan once the FLISP subsidy is paid into their home loan account.”
Pugin says she made an intensive study of government assistance over the past few years and realised that homeowners need to be assisted and informed about their rights to obtain FLISP subsidies.
“The research led to hosting workshops with property developers, estate agents, home buyers and homeowners as I realised the dire need for this amongst all stakeholders in the property market.”
Pugin says FLISP subsidies are available to pre-qualified property developments, and to obtain such approval, property developers need to submit their application in advance to the Department of Human Settlements.
“However, the FLISP subsidy is not limited to property developments only, as this grant is available to the open market for all first-time buyers as well,” she says.
“Any type of residential property can be bought, inter alia plot and plan except vacant, land, a new house, or a property with existing houses on it, as long as the applicant has pre-qualified for a home loan when he or she submits their application for the FLISP subsidy.”
Pugin says homeownership education will play a vital role in creating sustainable ownership, which is why she teamed up with Meyer de Waal, who developed the Rent2Buy. Homeownership education forms a vital part of their educational module.
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