Finance Linked Individual Subsidy Program (FLISP)
1. Background
In September 2004, the Minister of Housing Ms Lindiwe Sisulu presented her new housing strategy
entitled “Breaking New Ground” to cabinet. The strategy was approved and now forms the basis of all
government activity in respect of housing policy. The strategy included the new housing subsidy
program linked to mortgage finance called Finance Linked Individual Subsidy Program
Due to the structural difficulties in implementing FLISP at that time (deposit requirements, claw back
and other onerous factors) the banks withdraw from all FLISP related activities.
The President during his state of the nation address mentioned that a revised FLISP will be
implemented in April 2012. The National Housing Finance Corporation (NHFC) have been appointed
as the implementation agent, they will interact between the Banks, Government departments and
developers..
The formal implementation of FLISP will take place on 14 June 2013
Purpose of FLISP
FLISP is a response to affordability challenges faced by households earning between R3 501 and
R15 000 per month, those classified as the Gap Market. This target market would receive a subsidy
grant of between R87 000 (income R3501) and R10 050 (income R15000). The maximum purchase
price for a property to be financed is R300 000. This FLISP subsidy must be used to reduce the
principal debt to render the amortisation of the loan balance over the loan period more affordable.
Once fully implemented, FLISP will provide a subsidy to qualifying households who have secured
mortgage finance to:
-
Acquire ownership of existing improved residential property,
-
Obtain vacant serviced residential stands which are linked to household building contracts
with home builders registered with the National Home Builders Registration Council
(“NHBRC”), or
-
Construct a new residential dwelling assisted by a homebuilder registered with the NHBRC,
on a serviced residential stand, that is already owned by the beneficiary
2. FLISP Target Market:
-
Income between R3501 to R15000
Property Purchase Price of the less than or equal to R300000
First Time Home Buyer
3. FLISP Amount (The FLISP amount decreases with R100
-
-
Lowest subsidy R10050 (income R15000)
Highest subsidy R87000 (income R3501)
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incremental income adjustments.)
4. FLISP benefit to customer
Option 1
(FLISP applied pre-bond registration to lower
loan amount at application)
Option 2
(FLISP applied post bond registration)
Purchase Price
R
300,000
Purchase Price
R
300,000
FLISP
Approved Loan
Amount
R
50,000
R
50,000
R
250,000
FLISP
Approved Loan
Amount
R
300,000
Balance after REG
R
250,000
Balance after REG
R
250,000
Better interest rate
Higher interest rate
Lower LTV
No impact on Mandates
&Scales
Impact on LTV
Impact on Mandates &Scales
Both options are available to the customers, as detailed above. However, through Option 1 the
customer will receive better benefits from the bank in terms of:



Better interest rates for customers through lower Loan to Value.
Lower instalment repayments for customers (through lower interest rate / FLISP).
Normal lending credit criteria will apply as prescribed by the National Credit Act.
5. FLISP Implementation Plan:
We will treat FLISP as a deposit with no changes to lending strategies and / or pricing strategies.
The normal lending criteria will apply as if the customer has funds available to pay a deposit.
a) The FLISP/DEPOSIT calculation is done upfront (by the Source) and the source
captures the application as if the client had the deposit (equal to the FLISP subsidy).
See option 1 above.
b) The application is clearly marked “FLISP” on the cover page/application form.
c) A special conditions regarding FLISP is to be included at finalisation:
i.
“FLISP hold code: “131”
d) On receipt of an AIP or Final Grant template, the Source completes and submits the FLISP
application form to NHFC (together with the supporting documents as required by NHFC).
e) The Service Level Agreement with NHFC is a 4 day turnaround time to provide confirmation
of the FLISP application (approval or decline).
f)
In the event that FLISP offers a lower subsidy or declines the application, a template is to be
sent to the consultant to engage the client & action accordingly.
g) The Processing Centre will pend the application in SSH until receipt of the NHFC subsidy.
h) On receipt of FLISP outcome, SSH will forward application to the relevant processing area
and continue BAU process.
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FREQUENTLY ASKED QUESTIONS
1) What is FLISP?
FLISP stands for Finance Linked Individual Subsidy Program; a Government Subsidy Program
available to all First Time Home Buyers who earn between R3,501 to R15,000 (single or joint income)
per month and who are buying a property for less than R300 000 and applies to Absa for a Mortgage
Bond. The FLISP subsidy is used to reduce the loan amount required to purchase the property.
Example:
Purchase Price of the property - R300 000
Less FLISP subsidy
- R50 000
Loan Amount applied for
- R250 000
This option will afford you a competitively priced interest rate and lower instalments.
2) What FLISP amount can I qualify for?
FLISP is based on your income, the lower your income the higher the subsidy amount and the higher
your income the lower the subsidy amount.
Some examples of FLISP qualifying amounts:
a) Income between R3501 to R3600
b) Income between R10 001 to R10 100
c) Income between R14901 to R15000
- FLISP amount R87 000
- FLISP amount R43 125
- FLISP amount R10 050
FLISP figures as at November 2011 subsidy tables. The FLISP amount decreases with R100
incremental income adjustments.
3) Who can apply for FLISP?
FLISP applicants must meet the following criteria:
-
South African citizen with a valid ID; or
Permanent residents with a valid permit
Over 18 years and competent to legally contract
Never have benefited from a Government Housing Subsidy scheme before
Have an Approval in Principle of a home loan from Absa Bank.
First time home buyer
FLISP is for residential properties in formal towns where transfer of ownership and registration of the
mortgage bond is recordable in the deeds office.
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4) How can I apply for FLISP?
Absa and NHFC have agreed to implement FLISP over two phases, as detailed below:
Phase 1: FLISP will be available in the Eastern Cape region from the 9 May 2013, i.e. if you are
buying a property in the Walmer Linked Project the Developer will assist and guide you with your
FLISP application form.
Phase 2: A formal launch will take place on the 14 June 2013. All market segments will be targeted
during this phase, i.e. if you buy a property from a Developer, the Developer will assist you in applying
for FLISP. And if you are buying a property in the re-sale market, the Estate Agent will assist you in
applying for FLISP.
5) Can my FLISP application be declined?
Yes. The National Housing Finance Corporation has been nominated by the Department of Human
Settlements to manage and administer FLISP. Your application is assessed by NHFC and it could be
declined if they discover that you owned a property in the past.
6) Will Absa allow me to apply for Further Advance?
Yes, but the FLISP amount will be deducted from your further advance amount.
7) Can Absa decline my application if FLISP is approved?
Yes, Absa can decline your application. Absa prescribes to the requirements of the National Credit
Act. Your application could be declined due to affordability, credit bureau listing, and assessment of
your income or expenditure criteria amongst others.
8) Who can I contact if I need more information on FLISP?
FLISP is a government driven initiative, you can contact the:
-
National Housing Finance Corporation (representatives of Department of Human Settlements)
Call centre number 0860 011 011.
9) What if I bought a house in June 2012, for less than R300 000, bonded by Absa and I earn
R10 000 per month, would I qualify for FLISP?
Unfortunately Absa is unable to advice you in this regard; you will have to contact the NHFC to check
if you would qualify for FLISP.
10) What if I earn R3000 per month can I apply for FLISP?
No. FLISP is applicable to customers who earn between R3, 501 to R15, 000 per month (single or
joint income). You will have to check with your local municipality for a RDP house.
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