Herewith a guide:
Step 1: Do I qualify for FLISP ?
Go to the qualifying criteria and compare your income to determine if you qualify for a FLISP subsidy and the amount of such subsidy.
Important to note that even if you do meet all the requirements, your application must still be approved by the DoHS (Department of Human Settlements), the NHFC (National Housing Finance Corporation) and your own bank, who will lend the money to you in the form of a home loan.
If you are uncertain if you can qualify, contact us – go to “Contact Us”
Step 2: What is my credit rating?
If you are under debt review, under administration, sequestrated and/ or have judgements against your name, you may find it difficult or impossible to obtain a home loan.
A bank will request your permission and obtain a report from a credit bureau on your credit rating.
• This report will show the bank:
o how much debt you have and the impact the repayment of your debt may have on your affordability to pay the monthly bond instalments.
o your payment profile.
- Your payment profile will reflect if you pay your accounts on time or if you are regarded as a “late” or “slow” payer.
o If you have judgments, black listings, administration orders against your name, or if you are under debt review or under sequestration.
You are entitled to obtain on free credit report form any of the credit bureaus per year.
To clear your credit report you will have to order copies of your report from the 3 main credit bureaus, review the reports for inaccuracies or old information and then ask the credit bureaus to correct the information.
1. Mytransunion Credit Bureau – 086 148 2482
2. Experian Credit Bureau – 086 139 7628
3. XDS Credit Bureau – 011 645 9100
You can also obtain a Credit Health report which does not leave a negative footprint on your credit status and provides you with 3 reports in 1. www.credithealth.co.za
Step 3: What can I afford?
Find out the price of the property you are interested in.
Then determine the FLISP subsidy that you will qualify for based on your income. “click here”
Subtract the subsidy from your purchase price.
If you have your own cash deposit available, also subtract this.
The balance that is left will be the amount that you require to apply for a home loan.
Now determine the interest rate that will be applicable for your home loan. Usually it will be the prime rate of lending, currently 8.5 % plus 2 to 3 % added to the prime rate.
Go to the Affordability Calculator and work out how much you have to pay back the bank every month for a period over 20 years.
You repayment should not exceed 25 % - 30 % of your income.
Also consider your debt repayment and debt exposure and household and monthly expenses to determine if you can pay back the required home loan every month, plus added expenses like home insurance, rates, taxes and levies.
Also consider the costs of transfer, bond registration and bank valuation and administration fees if these are not included in your purchase price.
Step 4: Sign an Offer to Purchase/ Deed of Sale
Now go out and find the property you want to buy that is within your affordability price range.
You will meet with the agent or can purchase direct from the Seller.
You will be required to complete an Offer to Purchase – also called a Deed of Sale. This is a written Agreement between Buyer and Seller, identifying the property, stating purchase price and the terms and conditions under which you agree to the buying and selling of the property.
Step 5: Complete the home loan application form and the FLISP application form
You now need to complete the Home Loan application form provided by your bank as well as the FLISP application form.
Your home loan application will go to the your bank of choice, plus all the supporting documents like the Deed of Sale and you payslip, id and banks statements. The bank will assess your application, based on your income, credit profile and the value of the property offered as security.
One the loan is approved, you will be notified by the agent or bank.
If your home loan is approved, the next step will be to submit your application for the FLISP Subsidy by the Seller to the NHFC. The Bank's approval will most likely be subject to the approval of the FLISP Subsidy.
The NHFC notifies the DoHS that the application is procedurally correct and that you as the applicant complies with the criteria for the FLISP Subsidy. The DoHS then informs the NHFC of the formal approval of the FLISP subsidy.
The NHFC issues the required guarantee to the Bank as lender.
Important to note that legal action against a potential applicant as beneficiary may be taken by the MEC of the DoHS if any information supplied in the application for the FLISP Subsidy is incorrect or fraudulent. The MEC may also decide to institute criminal changes.
Step 6: Receiving transfer and the process
The following entities are involved in the Registration Process.
• The Seller
• The Buyer/Purchaser (You)
• The Estate Agent who sold you the property
• A Transferring Attorney – also called the Conveyancer (Appointed by the Developer/Seller)
• A Bond Attorney (Appointed by the Bank as lender) sometimes the same as the Transferring Attorney
• NHFC and DoHS (FLISP Subsidy)
• Bank as lender (Mortgage Bond)
• Deeds Office
Once the Home Loan and the FLISP Subsidy have been approved, the transfer of the property you bought and the registration of bond takes place in the Deeds Office.
The following steps are taken:
1. The Seller instructs the Transferring Attorney to transfer the property and hand him a copy of the Deed of Sale. The Transferring Attorney prepares the transfer documents and a draft Title Deed and includes any relevant conditions set out in the Offer to Purchase and current title deed conditions.
2. The Bond Attorney and the Transferring Attorney arrange the finances to be paid over on date of registration of transfer and arrange and guarantees for payment.
3. The Transferring Attorney arranges with the Seller and Purchaser to sign the transfer documents. If the transfer and bond costs are not included in the purchaser price, the costs are collected by the attorneys from the Purchaser.
4. The Purchaser signs the Bond registration documentation and pays the bond \registration costs (if not included in the purchase price) and the Bond Attorney (conveyancer) prepares and issues the necessary guarantees, forwards them to the Transferring Attorney, and prepares the Bond documents for lodging with the Deeds Office, simultaneous with the Transferring attorney.
5. The Transfer and Bond Documents are lodged simultaneously at the Deeds Office. The Deeds Office takes about 14 – 21 days to examine the deeds and supporting documents before they are ready for registration by transferring and bond registration attorneys.
6. On the day of registration in the Deeds Office, the Bank pays the Seller in accordance with the guarantees issued.
7. The Seller and Purchaser is advised that transfer has been done and the Purchaser now the rightful owner.
8. Keys are handed over to the new owner – if not already in occupation by that time.
9. Inspection of the property for “snags” are done one handover.
10. The new owner must obtain the beetle and electrical certificates.
11. The first bond instalment will be due a payable the next month – ensure that the debit order is in place and that there is sufficient funds in your account.
12. Follow up that you receive the rates and taxes account from the Municipality.
The entire process from signature to transfer will depend on the time it will take a Developer to build your house and the conveyancing attorneys attend to the transfer. Ask them to keep you updated to the process all the time.