Bond repayment unaffordable.
Whatever your reason for no longer being able to afford your bond repayments, the most important thing to do once you realise you’re not going to be able to make the payment is inform your bank.
Go speak to your bank manager pronto!
As prepared as you may be, life is unpredictable and often throws curveballs at you that you’re just not able to negotiate.
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Banks understand that life happens, with unpredictable medical expenses that creep up or – given the country’s current economic climate – they understand that companies are cutting back and people are being retrenched.
The biggest mistake many homeowners make is taking the ostrich approach, which is is to ignore the problem, hoping that things will look up in a couple weeks.
All this does, says Rawson Property Group MD Tony Clarke, is dig a far deeper hole that could ultimately result in your home being repossessed.
The key to holding on to your home when you’re struggling to make bond repayments is acting as early as possible.
Don’t wait until you’ve underpaid or missed your first repayment, Clarke advises.
Keep an eye on your finances and as soon as things look like they might get rocky, start making plans to minimise the damage. These things don’t go away on their own so you can’t just hide your head in the sand and hope for the best.
Make an appointment with your bank to discuss a short-term adjusted payment plan where your bank might allow you to pay a reduced bond for a few months to help you get back on your feet.
Alternatively, some banks extend a short ‘payment holiday’ to homeowners who have been retrenched, or women who are on maternity leave, as well as in circumstances where a homeowner is expecting a lump sum payment from an inheritance or insurance payout in the near future.
In situations where your finances are likely to be compromised over a longer term, your bank might restructure your loan over an extended period to reduce your monthly repayments permanently, says Clarke.
In circumstances where a homeowner is experiencing severe financial distress, the banks may advise that you seek the advice of a debt counsellor who can review the situation.
Once the counsellor has assessed the homeowner’s finances, they will be able to submit a repayment proposal to all the relevant creditors, says RE/MAX Southern Africa CEO Adrian Goslett.
An application will then be made in court to have the proposed repayment plan granted to ensure that legal action cannot be taken against the homeowner and the bank will not be able repossess the property.
If all else fails and the assessment reveals that you can no longer afford the home in which you live, you will need to consider placing your house on the market.
If a homeowner is in financial distress, sometimes selling the property through the distressed property channel is the most effective way to recover. In the case where the homeowner has managed to build up some equity, there might be enough money to cover their outstanding bond, as well as all or some of their other debt. This option could help the homeowner to start with a clean slate and re-establish themselves and their credit record, Goslett advises.
What’s important to remember is that no-one wins when a property is repossessed, so ultimately, it’s not in the bank’s interest to repossess your home and it would rather try to find a solution that works for both parties.
So if you’re in financial distress, the message is clear: Go speak to your bank manager pronto!
Author – Thandi Skade
Original Publisher – Destiny Connect
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