REK YOUR CHEQUE: Assistance for house buyers
FINANCE: FLISP designed to help you afford your first home
Owning a home is the dream of most people, and working towards it gives one a sense of purpose.
Now is also an excellent time to invest in a home, as South Africa’s interest rate has been cut down to historic lows due to the Coronavirus pandemic.
The South African Reserve Bank has already lowered interest rates by 300 basis points to 3.5% this year, taking cuts to the lowest in nearly 50 years in a bid to relieve struggling consumers and to shore up the economy.
Yet, getting a home loan and the deposit together is often a very daunting task and can discourage many people.
Very few are aware that if you are a first time South African homebuyer, there is a government programme called the Finance Linked Individual Subsidy Programme (FLISP) that can help you.
The Western Cape Department of Human Settlements explained the following about FLISP:
The programme is designed to help clients to pay for their first residential property.
This can be an existing home or a vacant plot where they plan to build their house.
It must be noted that the contractor building the house must be registered with the National Home Builders Registration Council.
The FLISP subsidy is paid to your bank or financial institution and will reduce your monthly loan instalments, making it more affordable to purchase a home.
The funds can also be used as a deposit to cover any shortfall between the approved home loan amount and the purchase price.
It is important to note that this subsidy cannot be used to pay costs such as transfer and bond registration fees.
The amount of the subsidy ranges between R27 960 and R121 626, and depends on your income.
The table for your income and the subsidy you qualify for can be found on the Western Cape Department of Human Settlements website.
What do you need to qualify for the subsidy?
Be over 18 years of age.
Be a South African citizen (or have permanent SA citizenship)
Earn between R3 500 and R22 000
In addition, you must not have received a government housing subsidy, or have owned fixed residential property before.
Be married or cohabiting.
Or be single with financial dependents.
How do you apply?
You must first apply for a home loan from your preferred financial institution or bank before you apply for the FLISP programme.
Once your home loan is approved, a FLISP application can be discussed with your bank, financial institution or the Department of Human Settlements to fill out an application form.
What if your home loan application was not approved?
According to the department’s website, if the home loan application is declined by the bank, then you will not be able to get the subsidy.
You can also apply for this programme if your bond was registered in the last two years.
What documents do you need to apply for FLISP?
To apply for the programme, the following documents must be presented:
Dependents
RSA bar-coded identity document (ID)
Bar-coded permanent residence permit (where applicable)
Birth certificates/RSA ID’s of all financial dependents (where applicable)
Proof of guardianship of foster children (where applicable)
Marriage certificate (where applicable)
Final order of divorce (where applicable)
Spouse’s death certificate (where applicable)
Proof of income
Home loan approval in principle
Grant letter from an accredited lender
Agreement of sale
Building contract and approved building plan (where applicable)
Transfer
Statement of transfer costs from conveyancer indicating transfer and bond registration costs (where applicable).
If you are from the Western Cape and your home loan has been approved, you can:
Visit 27 Wale Street, Cape Town for assistance
Call the Help desk on 021 483 6488 / 6411/ 8984/0623/2060
Email: [email protected]
Or visit the website www.westerncape.gov.za/dept/human-settlements.
More about home loans.
Think about what you like, what you don’t like, where you would like to live and where you don’t want to live.
Find out the value of the property in the area that you are interested in.
Visit different banks and financial institutions and compare home loan rates for the best possible deal.
How much deposit, how much you borrow and your repayment terms are key factors in your home loan being successful.
Ordinarily you are required to pay back your home loan amount, plus interest.
The most common terms for home loans are between 20 and 30 years.
You stand a better chance of being approved for a home loan if you have regular monthly income.
Among other things – age, income, job stability, credit history and debt – affordability is one of the most important factors a loan provider will take into account when they consider your application.
Most loan providers will also not approve a home loan if the repayments are more than 30% of your single or joint gross monthly income.
A home of your own gives you a sense of permanency.
It also gives you a valuable asset to pass onto your children or to use as collateral for further business ventures. 542
Work towards your deposit, but more importantly work towards paying your debt and getting your record score up – so that you stand a good chance of realising the dream of owning a home.
*Moeshfieka Botha is Head of Research and Consumer Education at National Debt Advisors.
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