South Africa is making a big property price change- what you should know.
Category Finance
Human Settlements minister Mmamoloko Kubayi has announced significant adjustments to South Africa's housing subsidies, known as the Finance Linked Individual Subsidy Programme (FLISP).
First introduced in the country in 2012, FLISP was offered as part of a home-loan-only option and was limited to people earning between R1,500 - R15,000 gross monthly income.
Kubayi said this will now be adjusted upwards to R1,850 - R22,000 gross monthly income and will be available for non-mortgage housing finance facilities from the 2022/23 financial year.
This, coupled with an increase in the annual tax-free threshold for persons under the age of 65 (from R87,300 to R91,250), is set to fast-track homeownership for many hopefuls, said Jackie Smith, head of product for bond originator Ooba.
"These announcements are welcomed by the affordable housing market, especially our qualifying customers. Ensuring that a subsidy is no longer dependent on a home loan is exactly what the market needs.
"The subsidy ranges from R27,690 to R121,626 for an existing home or a home that still needs to be built (off-plan). In addition, homeowners who purchased their first home in the past 12 months can also apply, should they meet the criteria," said Smith.
Smith said that Ooba is working with the National Housing Finance Corporation (NHFC) to help potential homebuyers. She added that potential homebuyers will benefit from being prequalified prior to starting the application process - for free.
"We work with the potential homebuyer to establish whether they qualify for FLISP and what amount they will be approved for,"
"In the past, these homebuyers would be rejected by the banks due to affordability but thanks to FLISP, the shortfall (including costs such as bond registration and conveyancing fees in some cases) can be covered through this subsidy."
The qualifying criteria for FLISP is as follows:
- Proof of an approved home loan
- Signed agreement of sale
- A building contracted and approved building plan (where applicable).
- A South African identity document.
- Identity documents for all occupants.
- A marriage certificate (where applicable).
"Potential homebuyers purchasing their first home and requires a mortgage can work with ooba Group to determine their eligibility through a prequalification," Smith said.
"Here, we check their credit score, make sure that their paperwork is in order and determine what finance amount they will be approved for by the banks (and the government) prior to submitting the paperwork to NHFC.
Author: Businesstech
