FLISP’s new policy means you don’t need a loan to obtain a subsidy

Article summary

• FLISP is a government subsidy aimed at first-time home buyers who fall within a low income bracket.
• You used to require home loan approval before applying for FLISP. Now you can utilise other sources of finance.
• Once the new guidelines are in place, you may be able to apply for FLISP even after you’ve purchased a home (if you meet the criteria).

FLISP, a government subsidy aimed at first-time homebuyers, has been made more accessible by new legislation that removes a major barrier to entry.

Whyereas you originally had to get a home loan application approved before applying for FLISP, you now have many other options when it comes to finding a source of finance.

The new FLISP policy is a significant boon for those whose financial situation made obtaining home loan approval difficult.

Note If you find the application process overwhelming, note that you can apply for FLISP through your financial institution or a home loan comparison service such as ooba Home Loans.

Why apply for FLISP in the first place?

If you’re a first-time homebuyer in a low income bracket, the government will subsidise your home loan through FLISP (Finance Linked Individual Subsidy Programme).

FLISP qualification criteria:

• Your income must range from R3 501 to R22 000 per month.
• You must be a South African citizen with permanent residency in South Africa.
• You must not have received a government housing subsidy before.
• You must be married or cohabiting OR single with financial dependents.
• You must be over 18 years old.
• You must not have owned a fixed residential property before.

If you meet the above criteria, you can apply for a FLISP subsidy. The subsidy can be used as a deposit, to cover transfer and bond registration costs, or paid into your home loan (thereby reducing the home loan term and monthly payments).

New FLISP policy: No home loan required

As of April 2022, home loan approval is no longer a prerequisite to FLISP approval.

The new FLISP policy allows for other sources of finance, such as:

• the beneficiary’s pension/provident fund loan.
• a co-operative or community-based savings scheme, i.e. stokvel.
• the Government Employees Housing Scheme.
• any other Employer-Assisted Housing Scheme.
• an unsecured loan.
• an Instalment Sale Agreement or Rent-to-own Agreement.

So rather than requiring home loan approval, FLISP now makes home loan approval more likely. The subsidy will be taken into account by the bank when assessing your home loan application.

The fact that you can use the subsidy as a deposit makes home loan approval more likely and earns you better interest rates.

Other changes:

The new legislation benefits potential FLISP applicants in other ways:

• It may now be possible to retroactively apply for FLISP. In other words, if you meet the criteria but didn’t apply when you purchased a home because you didn’t know about it, you may still be able to benefit from the subsidy.
• New provisions made for external agents, such as your financial institution or conveyancing attorney, to monitor the process of FLISP applications. This makes applications more efficient.

Need help applying for FLISP?

If you want to take advantage of this opportunity, ooba Home Loans can guide you through the FLISP application process and help organise the paperwork.

If you’re a low-income earner, it’s worth the effort to acquire a valuable asset and make the dream of homeownership a reality.