Best home finance options for first-time buyers

Best home finance options for first-time buyers

MAIN IMAGE: Steven Barker, head of Home Loans Standard Bank; Nadia Isaacs, chief operating officer Multinet Home Loans

More than half of the homes sold since lockdown restrictions were lifted have been to first-time homebuyers. Fortunately, there are excellent home finance options on offer.

Despite the many challenges facing the country to rebuild its’ battered economy while trying to combat the spread of the coronavirus, the residential property market has seen a welcome resurgence in home sales in the low-mid market section. Standard Bank reports that the 2020 property price growth is currently in the 2,2% to 2,6% range. Entry-level residential property median prices (R665,372) grew 2.5% year on year (y/y), while prices of medium-sized (R1,669,052) residential property prices grew 6.4% y/y in August and the median prices of small residential properties (R1,026,873) grew by 3.3% y/y.

According to Steven Barker, head of Home Loans Standard Bank, as of September year to date application volumes are up 23% y/y and the approval rate is also moving upwards from 54.19% to 55.89% in July. Just over half of the home buyers (54.88%) are first-time buyers. “The increase in the approval rate is driven by an increase in affordability for customers following multiple reductions in the repo rate,” says Barker.

Multinet Home Loans CEO Shaun Rademeyer confirms that they have seen an average submission volume increase of over 50% in the last three months vs. 2019 and the origination industry itself has seen a surge compared to 2019.

Also read: House price growth in double digits

Bank home loan policies

Buying a home is the biggest financial investment most people will make in their lives. However, knowing what to do or where to apply for instance for home finance can be intimidating for first-time buyers.

“Given the increase in first-time buyers in the market due to the low interest rate, it is vital that real estate agents know the different offerings that are available for these individuals,” says Nadia Isaacs, chief operating officer for Multinet Home Loans.

Isaacs did a comparison of the home loan offerings available from the four major banks (ABSA, Standard Bank, Nedbank and FNB) with the results below (Take note approval is subject to each bank’s home loans lending policy):

Who qualifies for a first-time home buyer product? A person who has never owned a home.

What are the benefits offered per bank?

Affordable Housing Offering –

Loan to value 100% 105% 100% 105%


Cost Inclusive Offering –

ABSA Young Professional STANDARDBANK FNB Young Professional
Loan to value 105% 105% 110% (could be restricted under COVID)

First-time home buyers may also be able to access other benefits like the following:

Up to 50% discount on attorney bond registration costs.

A saving on the initiation fee.

Flexible repayment terms of up to 30 years.

A choice of a variable or fixed interest rate.

Free access to a professional Borrower Education Programme. 

Assistance with obtaining a Finance-linked Individual Subsidy Programme (FLISP) subsidy if you qualify for it.

Options that allows you to register a bond for an amount that is higher than the required loan amount. By doing so, you will not have to register an additional bond in future.

A facility that allows you to access any surplus funds that accumulate when you pay more than the minimum instalment or when you pay a lump sum into your home loan account.

Alternative housing finance options

Despite the low interest rate, there could still be aspirant home buyers in the low to middle income group who need financial assistance to be able to afford the monthly instalments on a home. There are a few options open to them such as HIP (Housing Investment Partners) or by applying for a FLISP subsidy (Finance Linked Individual Subsidy Programme).


A few years ago, the state-owned National Housing Finance Corporation (NHFC) together with Old Mutual allocated more than R1.3bn to provide affordable home loans for people who do not qualify for government housing but are often turned down for mortgages. A positive of this funding model is that borrowers repay a set instalment irrespective of interest rate fluctuations in variable interest rates.

First-time home buyers can access finance for houses in the R100 000 – R950 000 price range at a 100% LTV. Visit for further information.

FLISP subsidy

With FLISP, first-time homebuyers could qualify for a once off payment of between R27 960.00 – R121 626.00 depending on their gross monthly income. This can go a long way towards lowering the amount due on their monthly instalments for the property (a home or a vacant serviced residential stand). Alternatively, the subsidy may also be used towards building a home on a piece of land which the beneficiary currently owns.

To illustrate, Rademeyer explains that a first-time homebuyer with an income of R19 000 per month may qualify for a bond of R735 200.00. At the current prime rate of 7% over a 20-year loan term, this would result in a R5 700 instalment excluding property and life insurance payable per month (total amount repayable R1 367 999).

“The FLISP sliding scale allows this beneficiary to qualify for a sum of R43 571 thus reducing the loan amount to R691 629 and thus reducing the monthly instalment to R5 362 (total amount repayable reduced to R1 286 926.00) over the same period- saving an overall R81 073.00,” explains Rademeyer.

Qualifying criteria:

  • The applicant must be a first-time homebuyer and have secured mortgage finance from a South African bank
  • Gross monthly household income must be between R3 500 and R30 000 per month
  • The applicant must be a South African citizen with a valid ID or permanent residents with valid permits
  • Older than 18 years and competent to legally contract
  • Have financial dependants
  • Never benefitted from any government housing subsidy scheme before

The subsidy is also available to civil servants provided that their total household income, including their housing allowance does not exceed R22 000 per month, excluding overtime and commission.

Once the bond amount is approved by the bank, the buyer must contact the National Housing Finance Corporation to apply for a FLISP subsidy. They can call 011 644 9800, e-mail or visit, or visit their nearest Provincial Department of Human Settlements. This subsidy can only be used as a deposit or to decrease the loan size. It cannot be used to pay any attorney fees such as transfer and bond registration costs.

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