It’s not a secret that a large percentage of South Africa’s population have been unable to afford a residential property. This is the reason why the Department of Human Settlements introduced the Finance Linked Individual Subsidy Programme (FLISP).
FLISP enables first-time ownership of property for citizens who earn between R3501 and R22 000 per month, by providing a subsidy that can be used to either pay the deposit on a house, or enable affordable monthly home loan repayments over the loan payment term. Absa has been encouraging its clients by creating awareness and education programs for qualifying applicants to make use of FLISP.
This is how Charl Visser, an Absa employee, introduced FLISP to his domestic worker, Mary Xaba (59), from Ivory Park, Johannesburg. Visser informed and handheld Mary through her successful FLISP application last year, which has been a life-changer for Mary who now owns a four-roomed RDP house in Ga-Rankuwa. Not only has she secured a permanent roof over the heads of her children but she has also ensured that she leaves them a lasting legacy of her hard work.
Visser explains that Mary, who has worked for his family for approximately 10 years, always had a dream of owning a home, but like many domestic workers, she had become stuck in the rut of the rental market. She was bound to R700 rental in an informal settlement, and carried all the costs of her children’s upbringing given her single parent status.
Regardless, Mary was absolutely determined to save whatever she could, and under Visser’s guidance opened a savings account, which also included a credit card so that she could establish a good credit rating. “Over the past two years, Mary was able to save enough for property transfer fees,” says Visser. “She also managed her credit card excellently which assisted her to be in good standing with the bank.”
This was the solid foundation upon which Visser and Mary could motivate for a home loan Approval in Principle (AIP), and even more excitingly, an application for FLISP. Mary qualified because she fell within the FLISP earnings bracket, which entitled her to a first-time buyer subsidy of R120 000. The house in Ga Rankuwa was on the market for R225 000.
With a subsidy in her hands and with a bank approval for a home loan, Mary only required a bond of R105 455, which obliges her to make monthly installments and which include a home owner’s insurance policy and mortgage protection cover.
“Obviously we were delighted that Mary qualified for FLISP,” says Visser. “It’s such a privilege helping someone acquire their first home. So many people have little understanding of the process of home purchase, the terms used and the financial implications. They are also least aware of subsidy programmes like FLISP, which is why I believe an employer should educate themselves in order to be in a better position to guide their workers through the processes and allay their fears and frustrations.
“FLISP is not a quick process, however” says Visser. “It can be very frustrating for a buyer, but Mary and I persevered by ensuring that we tapped into the National Housing Finance Corporation (NHFC) for advice on the options for expediting some of the steps in the FLISP regime, and followed up regularly.”
Another resource for FLISP information should be your bank. Absa as an example, provides comprehensive advice on the procedural obligations and compliancy on their website. Some of these include:
You must have a valid South African ID, and/or be a legal permanent resident with a valid permit
You have never benefited from any of the government’s other housing subsidy schemes
You have applied and been approved in principle for a home loan from an accredited South African financial institution
You must be a first time home buyer, earning an income of between R3501 to R22 000 a month
Must have financial dependents (for example: children, unemployed elderly, or supporting an unable-to-work individual).
Zydah Manuel, Portfolio Manager for First Time Home Buyers at Absa Home Loans also confirms that a FLISP subsidy covers new or old residential properties, and (conditional) vacant stands. “While we will handhold any applicant through the process, it helps if the first-time buyer has a good financial history and credit rating before they approach us. Credit ratings can be applied for online applications from a number of credit rating agencies.
“The applicant also needs to show they have enough money saved for transfer and bond registration costs, can afford the inclusion of building insurance, and meeting municipal costs,” says Manuel.
The Absa Home Loan Estimator allows an applicant to determine what is affordable before searching for a home within their means. With a budget now established, the home search can begin by applying filters for the right home search on the Private Property website.
Once a home is chosen and assuming Absa can grant approval of a home loan in principle, the FLISP Application form is submitted to the NHFC. Once approved the NHFC will place the subsidy into the transferring attorney’s trust account, or into the beneficiary’s home loan account.
Visser says that the most stressful part of the process is the waiting period. In Mary’s case, three offers to purchase were declined before she secured her Ga Rankuwa house. “It’s crucial to be prepared and understand the FLISP process. This is an emotional journey, and for us it was nerve-wracking awaiting the outcome.”
Now that she has a home, Mary’s dreams have become a reality and even expanded. She is currently determined to settle her home loan as quickly as possible by paying an additional R700 a month. “In this way I want to be able to resell and buy a bigger house one day. I feel free and secure now that I have my own home,” she says.