 Good day. You are here with Mayor de Waal. Today, I'm going to share with you how to save 39,000 rent when you buy property. This 59,000 rent may even be more. So if you stay with me, I'm going to share with you all the secrets how you can save when you buy property. Now this is really not a big secret, but I wanted to show everybody because we find that so few people know about how to save money when you buy a property. Our discussion today will focus on a couple of matters. The expert versus the novice when you buy a property. How to become an expert? How do I prepare myself? What if, I'll show you later what what if, if a poor piece of fan we're going to look at alternative finance property solutions and we're going to have some questions available. Now the expert versus the novice in buying a property. The secret is out there. You do not make money when you sell your property. You make money when you buy your property. The reason for that is that any expert property buyer will tell you that you have to buy a property that's below the market price. So only a few properties are actually discovered and found that you can buy under the market price. So we see our expert property buyer maybe owns a few properties. The novice is still renting. The expert has got a tenant to pay off the home loan of a landlord while the novice is paying off the loan of the landlord. The expert has leverage. He buys properties below market value. But the novice comes in and say I don't have money. I don't have a deposit. I do not know how to get my foot into the door to buy a property below market value. Now if you stick with me today, I'm going to share all the secrets with you. The cash flush expert says easy for me to buy a property and the novice says I struggle to save a deposit. The amazing news is that there's already a deposit available for you as a first-time buyer. Now we see in 2020 that 53% of all home loans are coming from first-time buyers. So first-time buyers have woken up and they realize I can actually own my own property. But the bad news, 56% of home loans are declined and wonder you ask yourself why is this? The banks are bending over backwards to give us home loans when it's the best time ever in 53 years to buy a property. 48% of buyers still however require deposit. So it's maybe not 100% correct to say that you will always get 100% home loan because only 40% of home loans are required not to pay a deposit. So let's look at the research we've done. We see and we know that a home is the biggest investment you will ever make. However, we find that buyers are doing a lot more research buying a new bicycle, a new cell phone, a new car than they actually go out and buying the biggest investment that is a house also tying you down to a home loan that you have to pay back over 20 years. So you go out and you do very little research. So we ask ourselves and how do we share this? How do we become an expert in the process of buying a house and my own property? And the secret again is educate yourself. Empower yourself with knowledge. If you are empowered, you can actually become an expert and discuss your property deal with your landlord. If you want to buy from him or with a seller or the estate agent, through education we realize you have to do it online. Now with COVID and even past COVID and everybody is eager to learn online. Number one, understand what will be required from you as a home buyer. Number two, locate your position. We always say that if you want to go from A to Z you want to travel somewhere first you use your GPS to determine where am I right now and where do I want to go? Where do I want to end? I want to end up as a home owner. So once you determine where am I right now, you can decide then how much money or you can find out. Do I have in my budget to be able to buy this property? And now it's a thing to buy and find the right property. You need all the support you can and that's why we develop educational videos and these videos will take you through to educate and inform and then help you to actually understand the home buying process. So we realize we're doing a little bit different the way around. Once you have watched the videos you can now read the book. Normally you first read the book and it comes out in a movie form. In this case watch the videos and we'll send you the booklet how to go about to buy your properties and your own property. But first we educate and inform people go back to the basics, determine your budget. We've even developed an app called mobile to budget where you can track your spending. You can determine this month was I under budget? Was I over budget? Remember if you're going to buy a property you're going to start paying hidden costs that you didn't have before. You're going to have to pay rates and taxes and debbies. You're going to have to provide for maintenance of your property. So we decided let's put this all in one format. We provide an online education how to go about to buy your own home. Now me as a property buyer I want to be informed. I want to be educated and I want to be empowered because there are a couple of building blocks that I need to start taking and putting together and stacking up on each other to be able to own my property. What is the affordability I have to qualify and afford this property? Can I make use of money from the government called FLISP and use the money from the government as a deposit? Do I have all my thicker in place? Do I have money for a deposit? Now we can actually change this block around and add this FLISP deposit that we can get as a deposit. Then I also need to go out and find the home loan I can qualify for because if I do need property finance I never will go out and first buy the property and then start stretching around what home loan I can qualify for. You're never going to shop with an empty wallet and then decide I want to buy stuff worth $2,000. You first check in your credit card, your bank account, your wallet if you have enough money and then you go out and buy property and then you determine the property price and the type that you want to pay. So with finance you've got to ask the question what will a bank require? We say that start to think how a bank thinks. It's no use you come and be with your own thoughts because you've got to think like a banker. What will a bank require from you as a property buyer to be able to qualify you for a home loan and you've got to think like outsmarting the bank? Think of this as a game that the bank thinks about a home loan on a certain way and you've got to outfox a bank and outsmart the bank how to do that. So how to do that first understand the three basic requirements of a home loan. Number one, what is your credit profile? If you've got a bad or a low or a red-credit profile most likely the bank will not assist you in entertaining your home loan application. If you have enough affordability then maybe you can buy the property but the bank will look at roughly one third of your income versus expenses and that will determine what home loan the bank will be able to give you. But remember all your credit that you have to pay is also brought into consideration. The bank looks at quite a lot of past payment history and also new accounts everything that combines there with your credit profile and your affordability. But then also important is your loan to value. No bank will give you more money than the valuation of a property maybe for first-time buyers and they will add another five percent to enable you to pay for the legal and the transfer costs. So once you've got these three ingredients you can actually go out and start looking for a property but you've got to determine your own credit profile for affordability and do you have money to put down for your transfer costs, your legal costs, your bond registration costs. So these are all the hidden costs that you actually a lot of buyers do not know where are. So what if what if what if my credit score is low or bad? We often find that people say this declined by the bank stopped my home journey. We see that 56 percent of home loans are declined and we say do not let this flat tire stop you in your journey to become a home buyer because a flat tire can be fixed. Sometimes you bring in a professional sometimes you have to do it yourself but do not let a flat tire fix your home loan journey. Number one first check out your credit score. There are many processes where you can actually go online and you can do your own credit score because you do not want to start the home buying process with a flat tire you're going to end up in the dustbin and most likely the bank will not come back to you and say can I help you? I see that you are in the dustbin and I would like to assist you. No, what they do they go to the next customer. So first do your credit score and once you've got a flat tire in respect of your credit score fix it get professional assistance and help to do that if you can't do that yourself. If your credit score is good now we can just proceed and do business. So bring in professionals we've actually teamed up with a company called Octogen and they are our debt repair specialists and professionals in this game. Now the next question is what if what if I do not have enough money for a deposit or legal fees. Luckily realize money available for first-time buyers already it's called Flis. Flis stands for finance linked individual subsidy program. Now let's unpack Flis a little bit more. The subsidy bands for Flis actually starts at 3,500 at one rate and then you can get 121,000 subsidies from the government. If you earn 22 you can get 27,960 from the government. So it's amazing money that's lying available for first-time buyers to put down as a deposit and we even have a Flis calculator for you. You can type in your amount that you earn remember I work on gross income and it will kick out the Flis subsidies for you. Two years ago the Flis subsidies would change tremendously. It went up from if you earn 10,000 you get 49,000 now you get 88,000. 15,000 used to give you a 20,000 subsidy now that subsidy has gone up to 62,000 even much better. It's triple amount of money available for a first-time buyer to get to use as a deposit or to use as transfer and bond cost when you buy a property. 22,000 rand didn't even qualify for a government subsidy now you can get 27,960,000 rand. So you can go to the Flis website you can type in the amount and it will indicate for you how much you qualify for because the Flis calculator is electronically geared that assists you to work out your Flis subsidy. So you can scroll down and you can work out your Flis subsidy. Now question comes up who is Flis targeted at? It's first-time buyers earn between 3,501 and 22. You must never have the benefit of a housing subsidy or own the property before. You must be a first-time buyer and a South African citizen. You must have a dependent financial dependent like a spouse or a child or even a parent and you must have an approved home loan from a financial institution. These are the big banks, APSA, Standard Bank, FMV and Net Bank. Well the good news is that in certain provinces even if your home loan has already been approved you can also apply for a retrospective Flis repayment but go and check it out with each province because each province has got a different timeline. So the Flis subsidy can be used in various ways. One as a deposit, reduce the home loan and or you can actually buy for more and add your Flis subsidy on top of your purchase price. You can refund that into a bond if you're really taking transfer only available in certain provinces and also in certain provinces you can cover your transfer and bond registration fees. But if you use it as a deposit I'm going to show you one example. If you buy for 410 and that's your income you put your prices for 10, you put down 70,000 from the government, you add legal fees so the good news is that you can apply for a smaller home loan. Now we all know it's much easier to qualify for a bond of 364 than 410 because the bank will see you as contributing that loan to value that deposit you don't ask a bank anymore for 100% deposit your interest rates will be lower you can negotiate a much better home loan if you use your subsidy to put down as a deposit. Now I started doing some calculations we start being creative we say how can I save 59,000 when a buy property on my home loan and the answer again maybe you know it by now use your full subsidy if you earned 15,000 a month I use this calculation and we said 15,000 will bring me a bond of 649,000 I worked on an interest rate of 7.75% and also remember that whenever you buy a property do a stress test on yourself add 2% on top of the prime rate currently at 7% and see your interest rate go up if you'll be able to survive this. Now the home loan that we could earn we could get on 15,500 comes down to 649,000. Now the amazing thing about this this 649,000 home loan can actually help you to qualify on your full subsidy for 59,000. So if you take your 59,000 and you end up only paying less for your property this is amazing you buy property now like a property a season property investor and you buy the property and the market value this is really amazing for any home buyer. Where do I find these properties now there are many out in the market we've looked at one development example of a glen coming up and they are really buyers that properties that you can buy in that price range and making use of your subsidy. Now the second gem I want to share with you is to be able to pay off your home loan much faster you can save even more now if you use your full subsidy or you can just save money every month by paying a little bit of extra money into your home loan but let's use full deposit let's look at a monthly salary of 19,000 rand payable over 15 years and we work on the interest rate of 8.75 remember this interest rate is much higher when you all to get in the market because currently the interest rates are 7%. If you were going to home loan on that payable over 30 years this is the payment that you might want that you will get 7.24,000 rand but now you say I'm going to start working clever I'm going to take my deposit that I get from the government of 42531 and I'm going to pay that into my home loan let us see how this will benefit you if you actually take this money and you don't stop and start paying less on your home loan you actually continue to pay the same home loan every month now let's look at the original payment over 15 years 5,700 rand every month now we stay with the 5,700 every month we find that we pay back the home loan six years and four months earlier we save a whopping 391 felt rand on the home loan of 724 that is more than 50% of a capital amount of the bond that we save this is one of the most amazing saving exercises we can do by using your government subsidy do not reduce your monthly repayment stay with the same amount and you'll be able to reduce your home loan six years and four months and save 391,000 rand so if you want to check what government subsidy you can qualify for how do you start your first check what home loan you can qualify so we actually raised it and put together a website and a platform where you can check out your bond and flisp affordability so you can go to this website maybe take a screenshot write it down https flisp.myonefitness.co.za this will help you to actually go through the process and check online what home loan and what government subsidy you can qualify for the ultimate aim is to enable to give you a certificate to say congratulations your initial flisp subsidy is 34,000 rand your home loan amount that you can get is 650 if we combine that you ought to qualify for a home loan of 684 now you have a power in your hand to go out and find the property and negotiate the best purchase price ever again we say do not stop only at looking at one property finance option we also add to the picture a normal home loan a home loan with a government subsidy rent to buy or instalment sale or even pension back loans don't forget any of these property finance solutions can actually help you to help you to buy a property don't get stuck with only a home loan particularly if you're a first-time buyer look at the government subsidy that can save you thousands and thousands of rents so on lines to this application we made it very simple if your home loan is already approved you can either go to the blue button on the left hand side on the right hand side if your home loan is not yet approved but this take you through a couple of steps there's the website again and the questions we will have is do you want to save $121,000 because that is the maximum subsidy you can get or do you want to save $27,960 on buying a property and this I hope I have learned I have learned a lesson preparing for this and I hope that you have also learned how to go about and save anything from $121,000 to $27,000 when you buy your first property so questions that come around quite often are for example how will the money be paid out people think that they will receive it in the bank accounts this will be paid into a home loan account or your attorney do I qualify if I'm self-employed yes indeed it's not only reserved for a few and that are that are received standard and regular paychecks you can also do that if you're self-employed I'm interested in building a new house a home do I qualify for FLISP yes indeed one of the requirements for FLISP is that it must be a completed house or must be a new house with building plans that you're going to construct if I want to use a FLISP money to renovate unfortunately not possible because this money is payable directly into a home loan account how long does the process take now that's an interesting question because we find that each province has got their own process application their timelines and particularly everybody seems to be going back to their offices now after COVID and since level one and we find that applications are speeding up a little bit for the last three four months it's been challenge challenging for the departments to work from home and get the process done I was previously allocated an IDP house I can now afford my own home do I qualify for FLISP unfortunately not because remember that you must be a first-time buyer and an IDP house will recognize or register you as an existing home owner can my parents be considered as beneficiaries indeed yes under conditions that they do not own a property and they are true financial dependents does my beneficiary need to resign with me those are questions that we can all answer if your assistance if you contact us but we can assist these are a couple of useful and helpful websites FLISP is there to assist you with your home loan application one indicator is there to assist you with your pre qualification we offer legal assistance and the property toolbox is all the property tools that you require in one box to assist you to go out and own your own property thank you very much for opportunity and we hope when you buy a property you are going to get the benefit of the best savings as a first-time buyer do not forget about a government FLISP subsidy thank you very much now that brings us to the end of this discussion how to save 59 fell around but remember this saving is not risk is not only 59 fell around it depends on the sliding scale and it works on the basis of how much you earn and then they can determine your pre qualification for a government subsidy thank you very much