First-time homebuyers who earn a gross salary of up to R22 000 can now take advantage of the government’s Finance Linked Individual Subsidy Programme (FLISP).
As of 28 July this year, the value of the first-time homebuyer subsidy was increased and the qualifying criteria extended from the previous income ceiling of R15 000 for a FLISP subsidy to R22 000.
Previously, the subsidy for people who earned R12 000 was R37 650 and now beneficiaries can qualify for a subsidy of R77 915 on the same salary.
Households or individuals who earn a gross salary of R15 000 previously qualified for a subsidy of R20 000 and now can benefit from a subsidy of R62 304, while those with an income of R22 000 would be eligible for a subsidy worth R27 960.
“Now that the FLISP subsidies are available for a total household income up to R22 000 per month, it means that the purchase price of a home of up to R680 000 on a prime lending rate (currently 10%) and R640 000 on an interest rate of the current prime lending rate of 10% plus 1% can be achieved, compared to around R450 000 under the old subsidy system,” says Verna Pugin, head of FLISP service at the CM2 Group.
Who qualifies for FLISP?
- You must be a South African citizen, over 18 -years-old and a first-time home buyer who earns a gross salary of between R3 501 and R22 000.
- Your home loan application must have been approved before you can apply for the subsidy.
- RDP house recipients are excluded from receiving this type of subsidy.
- Homebuyers who recently took transfer of property and meet the qualifying criteria are permitted to receive the subsidy.
- A FLISP subsidy can be used as a home loan deposit, but if a 100% bond is secured, you can then use the subsidy to reduce your bond term or monthly instalments.
Pugin says there are no restrictions on the type of property you can purchase if you make use of the subsidy. It also doesn’t matter whether you’re buying an existing home or a new property development.
The FLISP can be used to pay for property transfer costs including transfer fees and bond registration fees.
The only catch with the FLISP subsidy is that you will be liable to repay a portion of the subsidy if you resell the property before owning it for a minimum of eight years. Below is a table that outlines how much of the subsidy you’d have to refund should you sell your property early.