Do you qualify for a home-loan subsidy?
The less you earn, the more help you’re entitled to. Here’s what you need to know before you apply
FIRST Home Finance is a home-loan subsidy provided by the government to first-time buyers. Many South Africans are unaware that the subsidy (formerly known as FLISP) exists, or that it can be
applied for retrospectively.
The beauty of the home-loan subsidy is that you don’t have to ever repay it, which makes it a great way for young people or those in lower-income brackets to get a foot on the property ladder.
1 THE SUBSIDY AMOUNT
The subsidy ranges between R38 878 and R169 264, depending on your income.
The lower your income, the higher your subsidy.
There is a sliding scale on the First Home Finance website (nhfc.co.za) that shows the amount you can qualify for depending on your salary.
2 REQUIREMENTS
It’s only available to South African citizens over 18 who have either a single or joint gross household income of between R3 501 and R22 000 per month.
You must be a first-time home buyer who’s never owned a fixed residential property before or been the recipient of a government housing subsidy in the past.
Other requirements are that you should be married or cohabiting. It will then be necessary that the property is registered in the name of both spouses.
You can also apply if you are single and have financial dependants.
All applicants should have an approval-in-principle quotation for a home loan from an accredited South African financial institution or other proven financial means to buy the property (see below).
3 HOW IT CAN BE USED
To make sure the subsidy is definitely used for housing and not spent otherwise, there are limits to what you can do with the money.
● You can use it to buy an existing house or apartment that is on a municipal-serviced residential site. So, you can’t expect to get a subsidy for property in an area with no municipal services. ● You can also use it to build a house on a municipal-serviced residential site. The site should not have been acquired through a government housing subsidy. Keep in mind that the builder must be registered with the National Home Builders Registration
Council to ensure building and safety standards.
● The subsidy can also be used to cover transfer, bond registration costs or a shortfall on the bond if the subsidy amount is equal to, or greater than, the purchase price of the property.
4
FINANCIAL ESSENTIALS
You have to secure a loan or have the savings to buy the property or build your house when applying for the subsidy. The following funding can be used:
● An approved home loan.
● Your own savings.
● Housing loans granted by a community-based savings scheme, such as stokvels and co-operatives.
● Private sector employers with employer-assisted housing schemes.
● Unsecured housing loans from any lender registered with the National Credit Regulator. ● Pension-backed housing loans granted or guaranteed by a pension or a provident fund.
● Housing loans supported by a permission-to-occupy form, issued by government recognised traditional authorities in rural areas.
● An instalment sale agreement or rent-to-own agreement (an agreement you have with your landlord to purchase the property you have been renting, for example).
5 GET YOUR PAPERWORK READY
You’ll need these documents handy when you apply
● Smartcard or a barcoded identity document of every adult member of the household.
● Birth certificates for every child in the household who does not have a barcoded identity document.
● Marriage certificate.
● Divorce settlement agreement to prove child custody.
● Court order or order issued by the commissioner of child welfare, to prove guardianship. ● Proof of sources of income. ● Permission-to-occupy form in the case of applicants in rural areas.
● An affidavit for any union solemnised in terms of customary law.
6 WHERE TO APPLY
Once you have secured financing, contact your local department of human settlement office. You can call your nearest municipality for the contact details or visit the First Home Finance website (nhfc.co.za/finance-solutions/ first-home-finance) to download an application form.