FLISP – The Missing Money
When it comes to buying a property, money talks. Between bonds, cash offers and asking prices, the process is driven by it. What many first time home buyers don’t know is that there is a government subsidy in place to assist in purchasing property, and many are missing out.
FLISP, or Finance Linked Individual Subsidy Program, was put in place to bridge the gap between “free housing” and those who can comfortably afford housing on their own. This subsidy is something of a misnomer to most people, which often means potential home buyers simply don’t know they could be eligible for thousands of Rands.
In order to apply for the FLISP subsidy you need to meet a few criteria:
Your gross household income needs to be between R3501 and R15 000 per month
You must be over 18 years old and either a registered South African or a permanent resident with the correct permits
Have a preapproved home loan from a registered financial institution
You have never benefitted from any other form of housing subsidy scheme before
Once you have been approved for the subsidy it can be used to purchase a new, existing or old residential property, or a vacant, serviced residential plot that is linked to a NHBRC builder contract.
Verna Pugin (www.flisp.co.za), who has done extensive research into the program, found that most South Africans are simply unaware the subsidy even exists, or that it can be applied for retrospectively. “Most existing home owners do not know that they can apply for the FLISP subsidy even after they have taken transfer of the property,” Verna said. “We have noticed that each Province has a different application process for retrospective FLISP approvals, varying from almost immediately after the date of transfer to as much as 12 to 24 months later.”
The nature of the subsidy means that each potential recipient who does not receive the grant not only loses out on thousands up front but potentially even more over the long term. The FLISP subsidy, depending on how much you earn, is a once-off payment between R20 000 and R87 000 that can be used in two ways. Meyer de Waal, a compliance lawyer and pioneer in the property market, explains:
“A home buyer can use the subsidy as a deposit to purchase a bigger home. For example, if he qualifies for a home loan of R430 000, he can use the FLISP subsidy to add a further R55 000 to his buying power. Alternatively, you can use the FLISP subsidy to reduce your home loan and pay off your bond faster. This can save you hundreds of thousands of Rands over the course of your home loan by decreasing the time it takes to pay it off.”
One of the major stumbling blocks many potential FLISP recipients encounter is the need for a preapproved home loan. The FLISP subsidy itself can take a very long time to be approved and as such can impact on the sale of the property as many developers, sellers and agents simply cannot afford to wait. Using modern services like My Bond Fitness (www.mybondfitness.co.za) a buyer can not only gain a greater understanding of their credit record, but also obtain their affordability in minutes. With this knowledge in hand, the buyer can not only prepare in advance for the FLISP application but also the level of home loan he might be eligible for.