ARTICLES Financial

Author: property24
15 March 2021

New homeowners are not taking advantage of over R100m in housing subsidies

Of the concluded mortgage deals in the income range R3,501 to R22,000 about 57% of FNB retail customers qualified for Finance Linked Individual Subsidy Programme (FLISP) with an estimated potential value of R100 million – but the “challenging process to apply means many are missing out.

Despite this, only a small fraction of these customers actually took up FLISP as part of their home purchasing journey. This small take up is as a result of the challenging process to take up FLISP, which results in property practitioners not prioritising deals linked to FLISP.

FNB confirmed it has grown its affordable housing property lending book by 24% (R6.3 billion) year on year to help entry-level first-time buyers with owning a home.

FLISP is a government homeownership assistance programme for households that fall within the ‘gap housing market’ whose income is between R3 501 – 22 000. These households do not qualify for Government’s free housing programme and do not earn enough to afford an entry-level housing unit in the market. FLISP can be used as a cash contribution or deposit to supplement an approved home loan, and it reduces the overall outstanding balance and monthly repayments for the consumer.

Property24 previously interviewed MDW Inc. Property Management specialist Anele Matakane, who highlighted that in the Western Cape first-time homeowners can activate the FLISP subsidy within the first 12-months of their bond. In Gauteng, it’s as little as three-months after registration. Those in the Eastern Cape have the shortest stick of the draw, with administration of FLISP restricted to before registration takes place.

Raj Makanjee, CEO of FNB Retail says, “Homeownership is a life-changing experience for families, and it is often the single biggest financial investment that most families will ever make. As a result, we are humbled to continue enabling homeownership for individual customers and families that bank with us. Our dedicated focus to helping customers in the affordable housing income bracket is part of our holistic approach to assisting customers with all areas of money management. Over the years, we have been offering 100% home loans to qualifying customers in the affordable income category.”

Lee Mhlongo, CEO of FNB Home Finance, says, “Despite Covid-19 related challenges which affected the broader housing market, the affordable housing market remains resilient and attractive to home buyers. Interventions like FLISP supplement our own efforts to ensure that every family can own a home. The benefit of a cash contribution from a programme like FLISP can significantly reduce the financial burden on households. Unfortunately, most consumers are often unaware of benefits like FLISP, as a result, we take it upon ourselves to educate our customers on sources of funding during home buying.”

“There is an increased need for an inclusive approach to address the affordable housing challenges including community participation and stakeholder engagement, while considering the broader socioeconomic, cultural and spatial impact of housing development. We’re committed to walking this journey of home ownership with our customers as part of our best endeavours to help every family to own a home,” adds Mhlongo.

FNB customers can apply for a pre-approved home loan via the Bank’s digital channels including the FNB App, call the banks service suites or visit one of the branches to start their home journey. The Bank also assists approved first-time home buyers who meet the FLISP criteria to apply for the benefit. The FLISP requirement is that the customer must have an approved loan, be a South African citizen, first-time beneficiary of a government housing subsidy and have financial dependents.

Who can qualify for a FLISP Government subsidy:

be a South African citizen;
earn between R3 501– R22 000 (do not have a gross combined household income of more than R 22 000);
be a first-time buyer with a dependent, such being a spouse or a child;
have an approved home loan;
the buyer must never have had the benefit of a housing subsidy before.
As an example: the home buyer with an income of R19 700 per month ought to qualify for a FLISP subsidy of R 39 409.

The FLISP subsidy can be used in many ways:

Improve your buying power.
Add the R39 408 to the home loan of R 800 000 and buy a property of R 839 408.

Pay your transfer and bond costs – (only available in the Western Cape).
In theWestern Capea buyer can use the FLISP subsidy to pay transfer and bond costs. Transfer and bond costs on a purchase price of R 800 000 and a similar bond amount will be R 21 500.00 for transfer costs; and R 20 300.00 for bond costs.

Reduce your home loan amount and save thousands over your home loan repayment term.
If a subsidy of R 39 048.00 is paid back into the bond as a “once-off” payment, a further R 480 331.00 can be saved over the 30-year term it takes to repay a home loan. This is close to 50 % of the home loan and 6 years and 3 months can be shaved off the home loan repayment.

The original article can be viewed here:

OTHER ARTICLES FOR fIRST-TIME BUYERS:

  • First-time buyers guide | Everything you need to know before house hunting [17 October 2020] view here:

  • FLISP Application Guide:  view here:
  • How buyers can save R59k on their first bond [25 September 2020] view here:

  • 6 Reasons why a deposit is important when buying property [11 September 2020] view here:
  • Here’s one of the best ways to negotiate a better interest rate on your bond [5 March 2020] view here: