Government Flisp Grant Can Help Those in the Gap Market Buy a Home
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The government-introduced Individual Funding Grants (Flisp) program helps first-time buyers in the so-called “gap” market buy their own homes.
This market is made up of those who earn too much to qualify for free public housing but too little to buy without some form of financial assistance.
This grant is open to those with a combined gross income of R3,501 to R22,000 who meet the eligibility criteria, said Meyer de Waal, director of MDW Inc Attorneys, one of the founding members of the services of assistance Attorney Realtor Hub and Flisp. .
The grant ranges from R27,960 to R121,626 and is calculated on a sliding scale depending on the income of the beneficiary.
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To qualify, buyers must:
* Have a mortgage already approved.
* Be a South African citizen over the age of 18.
* Be married, cohabiting or single with a dependent.
* Never have received a similar grant before, such as an RDP house.
How to use the Flisp grant?
It can be used to pay a mortgage down payment or to decrease the amount of a mortgage. De Waal says that in the Western Cape, the grant can also be used to cover the costs of transferring or registering bonds. If the Flisp Grant is used as a deposit, a smaller home loan may be requested. For example, a grant of R 50,000 on a house of R 600,000 means that the mortgage amount should only be R 550,000.
“It’s easier to qualify for a R550,000 home loan than a R600,000 loan and your monthly payments will also be lower. ”
The subsidy can be used to increase the purchasing power of the buyer. For example, a Flisp grant of R 50,000 added to a home loan of R 600,000 allows the buyer to buy a house for R 650,000.
“The grant can help a first-time buyer to search for a home that they previously couldn’t afford because their mortgage approval was too low,” De Waal said.
Where do I start?
Many first-time buyers will find a property first and sign all legal documents to secure the property before knowing if they are eligible for a home loan and Flisp grant. But De Waal says qualifying for a grant should be the first step for any homebuyer.
“Most homebuyers find a property first and then start to worry about what they will qualify for. We first seek to help a buyer establish their real purchasing power and only then find a property that fits their budget.
De Waal says when you want to buy a house with a Flisp grant:
Find out if you are eligible for the Flisp grant. Determine how much home loan you will qualify for – check your credit score as a low or bad score can prevent you from qualifying for a home loan. Without an approved home loan, you cannot access a Flisp grant.
Check what you can afford by comparing your income, debt repayments, and living expenses to make sure you have at least 30% of your income available to pay off the monthly mortgage payments.
◆ Obtain your home loan prequalification estimate and add it to your Flisp grant amount. This will be your home buying power. Remember to budget for bond transfer and registration fees that you will need to pay if the purchase price does not include them.
◆ Start your real estate search according to your budget. When you find a property you can afford, sign an Offer to Purchase, using your Pre-Approval Certificate and the Flisp Grant as a guide.
Apply for the Flisp grant: As soon as the mortgage is approved, you can submit your Flisp application. You can apply directly to the Western Cape and Free State Department of Human Settlements as well as the National Housing Finance Corporation if you live in Gauteng or KwaZulu-Natal. One can apply directly or through approved service providers.
◆ Submit purchase offer to Flsp office for submission to banks for final surety approval.
The government will issue a guarantee to the ceding attorneys, once the Flisp grant is approved, or it can be paid directly to the home loan account. De Waal adds: “An online Flsp affordability calculator is available here. “Buyers should also check their financial health and what obligation they are entitled to at https://FLISP.mybondfitness.co.za.
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