Buying a first home can be very overwhelming for many, the thought itself of owning a property as big as a house can give you a sense of fulfilment. It is nearly always the case for first time home buyers lacking knowledge on how to go about buying a house and what subsidies are there for first time home buyers.
Usually, banks give loans to individuals with loan repayment amounts not exceeding 30% of their gross income. However, this may pose financial difficulties in one’s life, considering that the majority of employed South Africans have dependents and also have their own lives to maintain.
If we take a look at the costs of owning a house and living expenses, you can see how they can potentially leave you without any money to save. For example, a property repayment costing you 30% of your monthly gross income plus household expenses, insurances, taxes and other expenses, may leave you with absolutely nothing to save, consuming almost 100% of your gross income or more than 100% of your income in some cases.
The South African government is trying to ease the burden of home loan repayments or home building expenses to those earning minimum wage or earn an average income. These are individuals who don’t qualify for the RDP housing program and yet they find it difficult to own reasonable accommodation.
The South African government is empowering these individuals and their families through the Finance Linked Individual Subsidy Programme (FLIPS). FLISP is helping thousands of South Africans to get access to houses and home loans that could only have been a dream for many.
What is the Financial Linked Individual Subsidy Programme (FLISP)?
Financial Linked Individual Subsidy Programme (FLIPS) is a housing subsidy that was approved by the National Department of Human Settlements in 2005. The programme was developed to assist South Africans who earn between R3,501.00 to R22,000.00 per month and are over the age of 18. FLISP subsidy is based on the income that an applicant earns, the subsidy ranges between R27,960.00 to R121,626.00.
Is it FLIPS or FLISP?
FLISP or FLIPS are often used interchangeable however it is more accurate to say FLISP.
Since FLISP is a subsidy, you don’t need to pay the money back to the government. FLISP works with major banks in South Africa to make the program reachable to home loans applicants.
Normally a major bank will notify you of the opportunity that FLISP offers for your home loan and how to get it. In many cases, if you agree to take advantage of the FLIPS Subsidy, the bank through a mandate given by you, will apply for the FLISP subsidy on your behalf.
Note that the FLISP subsidy is only available for first time home buyers.
Who qualifies for FLISP?
.To qualify for FLISP, you need to earn a gross salary that is between the ranges of R3,501.00 to R22,000.00 per month. Special qualifications include:
- Being married or cohabiting or single with financial dependents.
- Must be over the age of 18 at the time of application.
- You must have not owned a fixed residential property before the time of application.
- Be a South African citizen or have a permanent residency in South Africa.
- You must have not received a government housing subsidy before.
Anyone possessing South African citizenship or permanent residency status can apply for the FLISP subsidy. However, you need to prove that you are married or cohabiting or have financial dependents when applying for the FLISP subsidy.
The minimum and maximum gross income allowed is very important when applying for the FLISP subsidy. Before making an application make sure that you won’t be making reference to your net income instead of your gross income.
Unlike the BEE program, the FLISP program is more progressive as it doesn’t discriminate on a person’s skin colour. So either black or white or holding citizenship of another country you can qualify for the FLISP subsidy provided you meet the minimum requirements.
What can the FLISP subsidy be used for?
The FLISP subsidy can be used for a number of things. The South African government wanted to make sure that the program benefits the intended target. Not only does the FLISP subsidy target rural South Africa but also urban South Africa for development purposes.
The main emphasis is on the class of income earners in South Africa, of which are the lower and middle class. By focusing on these income-earning classes, the government wants South Africans to create houses that are modern and suitable for living.
The uses of the FLISP subsidy comes in three ways. All these ways are listed and explained hereafter.
Purchasing an existing residential property
FLIPS subsidy is available for those who want to purchase an existing property. It is important to understand that you first need to be approved for a home loan if you are buying through financial intermediaries, however, if you are buying with cash and want a top-up from FLISP, you can apply directly.
Purchase a new residential property
You get a FLISP subsidy when you purchase a new residential house. The subsidy that you will receive is for a down payment on the price of the residential house, furthermore, the subsidy will be based on how much you earn.
The property will have to be for residential purposes meaning it shouldn’t be for commercial use or for any other occupation not related to you residing on that property.
Purchase of a vacant property
The last but not least is to use the FLISP subsidy to purchase a vacant property. FLISP subsidy can only be used for purchasing land only if that vacant property is linked to an NHFC(National Housing Builders Registration Council) registration or a house building contract.
What is the FLISP credit-linked application?
A FLISP credit-linked application is a FLISP subsidy application that pays directly the qualifying subsidy to the financial intermediaries to reduce the balance of your principal debt. This is to reduce the burden of repaying high monthly instalments and reducing them to much more affordable amounts.
The credit linked application is available after being approved for a home loan. You cannot use this money to make payments for expenses such as conveyancing and/or legal costs, you will have to foot these expenses yourself. Therefore, the credit-linked application is only for reducing the principal amount of your home loan.
What is the FLISP Non-credit linked application?
A FLISP non-credit linked application is an application whereby as an applicant you have sufficient funds available to cover a purchase of vacant property, existing property or new property and require a top-up from FLISP.
Assistance for the non-credit linked application will be based on the amount that the applicant qualifies for. The money that an applicant has can come from savings, returns on investment or even from an employer.
When applying for the FLISP non-credit subsidy, you will have to produce further documents. These documents include:
- A signed deed of sale by all parties involved.
- Proof that the beneficiary has the difference between the subsidy amount and the purchase price of the house. This proof could be from a bank confirming that you have such funds available or you can do it through a conveyancer.
- If you are assisted by an employer, a proof of funds must be submitted. The proof of funds from the employer must include the names of the beneficiary, his or her Identity number, and the amount.
- A copy of the most recent rates certificates so that the value of the property can be some indicated from these.
How to apply for the FLISP subsidy
- First, get a home loan approval or save enough money if you are taking the non-credit linked application route.
- Download the FLISP application form here and fill and sign it where necessary.
- Make sure that you have all the supporting documents which will or may include:
- Copy of your ID and that of your spouse or permit if not a South African citizen.
- Proof of income from your employer or ITR13 if self-employed. Must also have your bank statement.
- Proof of residency not older than 3 months at the time of application.
- Copy of the most recent rates certificate, a signed deed of sale, and proof of funds if you use the non-credit linked application route.
- Take all the necessary documents and the FLISP application form to your nearest Department of Human Settlement office, or alternatively, you can contact the National Finance Corporation for assistance.
FLISP qualifying income scale
|#||Income tier||Qualifying subsidy amount|
|1||R3,501 – R3,700.00||R121,000.00|
|2||R3,701.00 – R3,900.00||R120,585.00|
|4||R4,101.00 – R4,300.00||R118,504.00|
|5||R4,301.00 – R4, 500.00||R117,463.00|
|6||R4,501.00 – R4,700.00||R116,422.00|
|7||R4,701.00 – R4,900.00||R115,382.00|
|8||R4,901.00 – R5,100.00||R114,341.00|
|9||R5,101.00 – R5,300.00||R113,300.00|
|10||R5,301.00 – R5,500.00||R112,259.00|
|11||R5,501.00 – R5,700.00||R111,219.00|
|12||R5,701.00 – R5,900.00||R110,178.00|
|13||R5,901.00 – R6,100.00||R109,137.00|
|14||R6,301.00 – R6,500.00||R108,079.00|
|15||R6,501.00 – R6,700. 00||R107,056.00|
|16||R6,701.00 – R6,900.00||R106,015.00|
|17||R6,901.00 – R7,100.00||R104,974.00|
|18||R7,101.00 – R7,300.00||R103,934.00|
|19||R7,301.00 – R7,500.00||R102,893.00|
|20||R7,501.00 – R7,700.00||R101,852.00|
|21||R7,701.00 – R7,900.00||R100,811.00|
|22||R7,901.00 – R8,100.00||R99,771.00|
|23||R8,101.00 – R8,300.00||R98,730.00|
|24||R8,301.00 – R8,500.00||R97,689.00|
|25||R8,501.00 – R8,700.00||R96,648.00|
|26||R8,701.00 – R8,900.00||R95,608.00|
|27||R8,901.00 – R9,100.00||R94,567.00|
|28||R9,101.00 – R9,300.00||R93,526.00|
|29||R9,301.00 – R9,500.00||R92,486.00|
|30||R9,501.00 – R9,700.00||R91,445.00|
|31||R9,701.00 – R9,900.00||R90,404.00|
|32||R9,901.00 – R10,100.00||R89,363.00|
|33||R10,101.00 – R10,300.00||R88,323.00|
|34||R10,301.00 – R10,500.00||R87,282.00|
|35||R10,501.00 – R10,700.00||R86,241.00|
|36||R10,701.00 – R10,900.00||R85,200.00|
|37||R10,901.00 – R11,100.00||R84,160.00|
|38||R11,101.00 – R11,300.00||R83,119.00|
|39||R11,301.00 – R11,500.00||R82,078.00|
|40||R11,501.00 – R11,700.00||R81,038.00|
|41||R11,701.00 – R11,900.00||R79,997.00|
|42||R11,901.00 – R12,100.00||R78,956.00|
|43||R12,101.00 – R12,300.00||R77,915.00|
|44||R12,301.00 – R12,500.00||R76,875.00|
|45||R12,501.00 – R12,700.00||R75,834.00|
|46||R12,701.00 – R12,900.00||R74,793.00|
|47||R12,901.00 – R13,100.00||R73,752.00|
|48||R13,101.00 – R13,300.00||R72,712.00|
|49||R13,301.00 – R13,500.00||R71,617.00|
|50||R13,501.00 – R13,700.00||R70,630.00|
|51||R13,701.00 – R13,900.00||R69,590.00|
|52||R13,901.00 – R14,100.00||R68,549.00|
|53||R14,101.00 – R14,300.00||R67,508.00|
|54||R14,301.00 – R14,500.00||R66,467.00|
|55||R14,501.00 – R14,700.00||R65,425.00|
|56||R14,701.00 – R14,900.00||R64,386.00|
|57||R14,901.00 – R15,100.00||R63,345.00|
|58||R15,101.00 – R15,300.00||R62,304.00|
|59||R15,301.00 – R15,500.00||R61,264.00|
|60||R15,501.00 – R15,700.00||R60,223.00|
|61||R15,701.00 – R15,900.00||R59,182.00|
|62||R15,901.00 – R16,100.00||R58,141.00|
|63||R16,101.00 – R16,300.00||R57,101,00|
|64||R16,301.00 – R16,500.00||R56,060.00|
|65||R16,501.00 – R16,700.00||R55,019.00|
|66||R16,701.00 – R16,900.00||R53,979.00|
|67||R16,901.00 – R17,100.00||R52,938.00|
|68||R6,701.00 – R17,300.00||R51,897.00|
|69||R6,701.00 – R17,500.00||R50,856.00|
|70||R6,701.00 – R17,700.00||R49,816.00|
|71||R6,701.00 – R17,900.00||R48,774.90|
|72||R6,701.00 – R18,100.00||R47,734.00|
|73||R6,701.00 – R18,300.00||R46,693.00|
|74||R6,701.00 – R18,500.00||R45,653.00|
|75||R6,701.00 – R18,700.00||R44,612.00|
|76||R6,701.00 – R18,900.00||R43,571.00|
|77||R6,701.00 – R19,100.00||R42,531.00|
|78||R6,701.00 – R19,300.00||R41,490.00|
|79||R6,701.00 – R19,500.00||R40,449.00|
|80||R6,701.00 – R19,700.00||R39,408.00|
|81||R6,701.00 – R19,900.00||R38,367.60|
|82||R20,001.00 – R20,200.00||R37,327.00|
|83||R20,201.00 – R20,400.00||R36,286.00|
|84||R20,401.00 – R20,600.00||35,245.00|
|85||R20,601.00 – R20,800.00||R34,205.00|
|86||R20,801.00 – R21,000.00||R33,164.00|
|88||R21,201.00 – R21,400.00||R31,082.00|
|89||R21,401.00 – R21,600.00||R30,042.00|
|90||R21,601.00 – R21,800.00||R29,001.00|
|91||R21,801.00 – R22,000.00||R27,960.00|
FLISP is a program that works well for South Africans, however, the program doesn’t have much awareness since a lot of South Africans don’t apply for the subsidy. The government will have to work hard to ensure that the FLISP program reaches the intended persons rather than focusing only on distributing funds to the intended persons.