How to buy a home when you're broke
Buying your first home may seem like an impossible achievement when you're broke. However, there are many opportunities of which you may not be aware that can help you afford your first home. Below are a few tips to help you buy a home when you're broke:
Government subsidies can help you buy
You can make use of the variety of available National Housing Subsidy Programmes to help you afford the costs of homeownership. One of these often under-utilised programmes is the Finance Linked Individual Subsidy Program (FLISP). Households who earn between R3,500 - R22,000 per month can apply for this subsidy. Depending on the applicant's gross monthly income, the once-off FLISP subsidy qualifying amount varies between R27,960 and R121,626 (as per the FLISP Subsidy Quantum). Successful applicants will receive this money which can be used either as a deposit or to cover the transfer and registration fees.
Low on cash? Buy with family
One possible solution for low-income households is to pool resources by co-applying with a partner or family member so that you have a greater chance of qualifying for a home loan. However, this decision should not be undertaken lightly as this does mean that you'll each co-own the property and be responsible for the monthly repayments.
Buy a home without a deposit
Another option is to purchase a property without a deposit. For the year ending 31 March 2018, 42,76% of all home loans registered through BetterBond were calculated at 100% of the purchase price. ABSA even offers a "Young Professionals Home Loan" of up to 105% bond for a property valued at R1.5million or less. The extra 5% helps homeowners afford the registration costs and transfer duties. However, with these options, you will end up spending a substantial amount more on interest charges over the life term of the loan.
Partner with the professionals
To help achieve your homeownership goals, it's always best to seek the advice of professionals in the industry. A financial planner can help you create a budget and discover what you can afford. Next, a bond originator can get you prequalified for home finance. Lastly, your nearest RE/MAX agent can help you find a home within your budget. By meeting with each of these professionals, you can put a plan in place to help you attain your homeownership goals.
