Real Estate Investor Magazine South Africa August 2015

ACQUIRING Affordable Housing FLISP assistance for new homebuyers BY VERNA PUGIN AND MEYER DE WAAL T he Finance Linked Individual Subsidy Plan (FLISP) is an initiative driven by the Department of Human Settlements to assist qualifying households who have secured a mortgage bond to acquire a residential property for the first time. First time home buyers can now claim the FLISP subsidy, reduce their bond repayments, bond term and gain money that they would have otherwise lost had they not made a claim for the subsidy. The aim is to reduce the initial home loan amount, thus making monthly home loan repayments affordable. Individuals from households whose income range is R3 501 and R15 000 per month can claim a FLISP subsidy. These individuals in the ‘affordable’ or ‘gap’ market can find it hard to qualify for housing finance. Their income is regarded as too low for mortgage finance but too high to qualify for the government ‘free basic house’ subsidy scheme. “The aim is to reduce the initial home loan amount thus making monthly home loan repayments affordable.” South African citizens who are first time home buyers with an approved home loan from a financial institution and who have never benefited from a housing subsidy scheme before can apply for a FLISP subsidy. They need to have a property they want to buy or own a property to qualify. When these applicants qualify for the subsidy they can purchase an existing, new or old residential www.reimag.co.za property. These properties must be situated in formal towns where transfer of ownership and registration of a mortgage bond is recordable in the Deeds Office. Alternatively, the applicant can buy a serviced residential stand that is currently vacant and is linked to a construction worker that is registered with the National Home Builders Registration Council (NHBRC). The once-off FLISP subsidy amount ranges between R10 000 and R87 000. This is dependent on the applicant’s monthly income. A major benefit of the subsidy scheme is that FLISP reduces the initial mortgage loan amount thus making monthly loan repayments affordable. The payment is then made to the home loan account. See a cost analysis below to see how much you can save: Property price Bank home loan approval Less FLISP as a deposit Eventual home loan amount R300 000 R300 000 R50 000 R250 000 FLISP augments the shortfall between the qualifying loan amount and the total product price. The payment is made to the transfer attorneys. See a cost analysis below to see how much you can save: Property price Bank home loan approval FLISP as home loan top up Eventual home loan amount R300 000 R250 000 R50 000 R250 000 RESOURCES Consumer Housing Education, My Budget Fitness AUGUST 2015 SA Real Estate Investor 35

Real Estate Investor Magazine South Africa August 2015 | Page 37