Let’s be honest, banking – with all its financial procedures, is intimidating. Especially for those just making ends meet, without much wiggle room with their disposable income.
For now, you manage just fine; you can afford to pay your rent and just about cover your food, transport, electricity and other minor expenses.
You’ve considered buying your own house – a legacy to leave to your children someday – but you’re not so sure about all the additional costs involved and whether you really can afford it just yet.
You are, as they say, in the middle to lower income bracket, and as far as you know, you probably can’t manage to secure and service a bond right now.
So, buying a house has become a dream you keep putting off, waiting for a better time, when the economy is stronger, when you are more financially secure.
Rest assured, you are not alone in this and both the government and financial institutions are well aware of people in your financial situation.
As a result, they have come together and put forward products and services to address the housing shortage in the country, and to equip as many South Africans as possible to be self-sufficient.
Angela Glover, head of product at FNB Secured Lending, said FNB has several solutions available to help their customers reach their dreams of owning a home.
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These solutions include Collective Buying, FLISP Subsidy Programme and Pension Backed Loans.
Collective buying
Glover explained that this was available to help customers to improve their affordability, by partnering with other individuals to purchase a property together.
“By combining income to purchase a single property, a group (of up to 12 people) working together is able to afford more than one person on their own. Individuals within a collective remain jointly and severally liable for the property and will each enter into the legal agreement with the bank regarding repayment requirements,” Glover said.
FLISP
The Finance Linked Individual Subsidy Programme (FLISP) is a housing subsidy for first-time home buyers to assist with purchasing a home. If your household income is between R3 501 to R22 000 per month, and you meet all the qualifying criteria, you may use this subsidy to purchase your first home.
Glover said that FNB can help qualifying customers to access the governmental FLISP. She explained that this subsidy, once approved, is paid directly into your home loan account as a lump sum, reducing the outstanding balance.
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Pension Backed Loans
“Our product offering also include Pension Backed Loans, where selected pension funds have partnered with us to allow pension fund members to leverage a portion of their pension as an asset to secure a loan against. In line with the Pensions Funds Act, such a loan may only be used for housing purposes. This allows you to get value from your pension now, without accessing your savings directly,” Glover said.
“Further to this, we have partnered with a variety of developers to offer special discounts to our customers who are buying within new developments. In addition, we offer prudent home buyers a comprehensive Mandatory Homeowners Programme with very useful information to empower first time homeowner on their journey.”
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Absa joins the party
Nondumiso Ncapai, Managing Executive at Absa Home Loans, confirmed that the red bank also comes to the table for those in the middle to lower income bracket when it comes to buying their first home.
“At Absa, we recognise that there is no one-size-fits-all approach in solving for the financial circumstances of consumers and, as such, we encourage consumers to contact us to find out more about the variety of credit solutions offered by our Home Loans business to accommodate their wide-ranging needs.
“As a multi-channel business, our customers may apply through various channels should they wish to explore any of our propositions,” she said.
To service the affordable housing market, Absa offers qualifying first-time home buyers the option to borrow up to 100% for the prospective property’s value and discounted bond registration costs.
The bank explained that for households with a single or joint gross monthly income of R27 200 or less the MyHome Loan proposition offers a range of benefits, including the option to borrow up to 100% of the prospective property’s value, a 50% discount on attorney bond registration fees, free access to Absa’s Borrower Education Homeownership Programme.
These help customers to familiarise themselves with budgeting and the ins-and-outs of homeownership, access to their range of pre-buying digital tools, such as the bond calculator and the pre-qualification tool, (easily accessible from the absa.co.za website) and Absa Life Cover to aid homeowners in securing the financial futures of their beneficiaries.
“Customers applying for a home loan under this proposition may also qualify for lower interest rates should they open a primary transactional account with Absa and pay off their loan by debit order from an Absa transactional account,” Ncapai said.
She confirmed that Absa is also able to assist with FLISP.