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Category Archives: Conveyancing

FIRST TIME HOME BUYERS AND OWNERS ARE LOSING THOUSANDS

Many home buyers and current new home owners are unaware that first time home buyers may qualify for a housing subsidy under the FLISP grant.

“If they do not investigate and make use of the opportunity they may be losing thousands of rands by not claiming the FLISP subsidy, but also losing out on the prospect of reducing their bond repayment and bond term and as such losing out thousands more” says Verna Pugin who conducted an investigation into FLISP subsidies.

The word FLISP is an abbreviation for “Finance Linked Individual Subsidy Plan”, initiated by the Government to assist first time home owners in acquiring their own homes.  It is available to all first time residential home buyers who earn between R3 501 – R15 000 per month and whose home loan has been approved, (as a pre-requisite) as well as current first time new home owners (who have already taken transfer). Current new home owners must apply for the assistance within 12 months of taking ownership.

The minimum FLISP subsidy is R20 000.00 and if such subsidy is paid into a bond of R500 000.00 as a “once-off” payment, the home owners can save up to almost R100 000.00 and reduce his/her bond repayment from 20 years to almost 18 years, saving 2 years of bond repayments. Similarly, a subsidy of R40 000.00 awarded to a qualifying home owner with an income of R11 700.00 who may qualify for a home loan of R400 000.00, may save more than R170 000.00 on bond repayments, and reduce the bond repayment term from 20 years to 15 and a half years.

The maximum purchase price of R300 000 was removed since 1 April 2014, yet few existing home owners are aware of this opportunity to claim their FLISP subsidy.

The benefit to a bank will be that an additional payment into a bond account will also reduce the debt risk for a bank, as it reduces the loan to value ratio. ”We suggest that clients approach their banks to reconsider and reduce the interest rate that is applicable to a home loan once the FLISP subsidy is paid into their home loan account”, says Vern Pugin, who made an intensive study of government assistance over the past few years and she realised that home owners need to be assisted and informed about their rights to obtain FLISP subsidies. The research done by Verna led to hosting workshops with property developers, estate agents, home buyers and home owners as she realised the dire need therefor amongst all stakeholders in the property market.

FLISP subsidies are available to pre-qualified property developments and to obtain such approval, property developers need to submit their application in advance to the Department of Human Settlements.

The pre-approval of a home loan remains a barrier for many first time buyers, property developers, sellers and estate agents as they do not want the property transaction to be held up, due to the long waiting period to obtain a FLISP approval. Up to recently home buyers did not have access to the services like the software developed by My Bond Fitness to pre-check a buyer’s credit profile status and affordability in advance.

With the services provided by My Bond Fitness www.budgetfitness.co.za a buyer can obtain his affordability within a few minutes and as such he determine if he will be able to qualify for FLISP and then in advance prepare himself for the FLISP application.

The FLISP subsidy is however not limited to property developments only as this grant is available to the open market for all first time buyers as well. Any type of residential property can be bought, inter alia plot and plan except vacant, land, a new house, or a property with an existing houses on it, as long as the applicant has pre-qualified for a home loan when he or she submits their application for the FLISP subsidy. Applicants will have to meet the qualifying criteria which can be found on our website and will be advised by us as to which documentation is to be annexed in support of their application.

Verna realised that home ownership education will play a vital role in creating sustainable home ownership and teamed up with Meyer de Waal, who developed the My Bond Fitness as well as the Rent2Buy concept.

Home ownership education forms a vital part of the home ownership journey and Rent2buy process.

With Rent2buy, aspiring home owners will first rent the home they want to buy, should they not meet the strict requirements of a bank to qualify for their home they want to buy, and during the rental period, they secure the property with the Rent2Buy agreement, then have the time and opportunity to improve their credit rating and affordability and save towards a deposit to enhance their chances the next time they apply for a home loan, some 12- 18 months later. Verna says such opportunities will allow the processing a FLISP subsidy application much faster as by the end of the rent2buy period, all the required FLISP documentation will be ready and available for processing.

For more information – go to www.flisp.co.za

These two articles were featured in the recent Real Estate Investor Magazine Here is your link to the latest March 2015 issue of the Real Estate Investor Magazine.

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Posted by on 10/03/2015 in Conveyancing, Property

 

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Deeds office slows down.

article2blogThe Deeds Office has slowed down somewhat in the last three weeks due to the public holidays and one short day of early closure before the Easter weekend. The result is that the Deeds Office is 7000 deeds behind schedule.

What can parties do to facilitate a speedier sale? And following on this question is what can parties do to facilitate a quicker registration when the Deeds Office presents deeds for registration?

We have found that transactions where Sellers are organised and have advised the Bank of their intention to cancel their bonds right from the outset of the sale process by giving the mandatory 90 days or three months’ notice, have gone a long way in registering transactions in time.

Secondly, attending to the electrical inspection, beetle inspection, plumbing inspection, gas compliance and, where applicable, electrical fence inspection from the outset of the transaction can be very beneficial to the parties. The reason for this is that if any repairs are required they can be attended to immediately and not when the Deeds Office presents the deeds for registration. Then it may be too late to attend to repairs as one only has 7 days to register once the deeds office are up (ready) for registration and contractors are potentially booked up at that point in time.

Contact Mark Witzmann at mark@oostco.co.za or on 021 461 0065 for further details regarding the above.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

 
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Posted by on 25/04/2013 in Content, Conveyancing

 

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Seller’s prerogative to appoint conveyancer.

article4blogIt is a Seller’s prerogative to appoint his/her conveyancing attorney to transfer the property sold. Often, however, as with most negotiation it can be agreed that the Purchaser will use their attorney.

This often occurs over the issue of discounting of fees where the Purchaser’s conveyancer will give a discount to the Purchaser for procuring the transfer. However, Sellers must approach this with caution. If a Seller is comfortable with his/her conveyancer do not be lulled into giving away the transfer of your most valuable asset just because a Purchaser is getting a discount.

However, if a Seller is battling to sell and the offer is a decent offer but with the Purchaser using his/her conveyancer as a condition of sale, then the Seller must at least ensure that the Deed of Sale still reads as “the Seller’s conveyancer shall be………” ( and one then inserts the name of the law firm of the Purchaser’s choosing). That way the Purchaser’s nominated conveyancer still represents the Seller as the Seller’s conveyancer in the Deed of Sale. Do not therefore allow the estate agent or buyer to delete the words Seller’s Conveyancer in the Deed of Sale and replace with “Purchaser’s Conveyancer”.

The effect of this is that even though the Seller is using a conveyancer of the Purchaser’s choosing, the Deed of Sale strictly states that the conveyancer is still the Seller’s conveyancer.

Contact Mark Witzmann at mark@oostco.co.za or 021 461 0065 for more information on this topic.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.