Worried about losing your home? These are the steps you can take if you’re having a problem meeting your repayments.
It is not a pleasant thought but the fact is that many SA homeowners are struggling financially and worried about losing their homes.
“Even though there have not been any interest rate increases recently, the monthly repayment on most bonds is currently about 7% higher, in cash terms, than at the beginning of last year,” says Gerhard Kotzé, MD of the RealNet estate agency group.
“The repayments on credit cards, cars and other debts are also higher, and consumers are also paying more for food, water, electricity, transport, school fees and all forms of insurance. According to the latest stats available from the National Credit Regulator, there are 9,85m South Africans with impaired credit records, which means they are seriously in arrears on at least one account - and usually more. The number of impaired accounts currently is over 20m.
“So it’s no wonder really that an increasing number of people are concerned about being able to meet all their financial commitments – and about what would happen if they were to default on their bond repayments.”
However, he says, the one thing they should not do is panic.
“For a start, they need to understand that the banks really don’t want to repossess their homes. They would far rather have a homeowner in place and some regular income from the property than be forced to incur the costs of repossession, and of securing and maintaining the home, as well as the total loss of repayments on the loan for several months or even years.
“Secondly, homeowners need to take their banks into their confidence if they are having financial difficulty, to show that they are willing to make the necessary arrangements to keep their homes. And thirdly they should keep paying as much as they can, in order to keep the interest on the loan from compounding too rapidly.”
Kotzé says that once they have stopped to think, homeowners may also realise that their current “cash-crunch” is temporary. “Perhaps you are due for a salary increase within the next few months, or perhaps you will soon be paying off another debt and be able to put more money towards your home loan repayment.
“You could also sell some other asset – like a second car - and pay the cash you raise into your home loan account to reduce the principal debt and lower the minimum monthly repayment.”
As a last resort, he says, if you really cannot make ends meet and see no prospect of doing so soon, you may want to consider selling your home and moving to a less-expensive one – or renting until your cash flow situation improves or rates come down again.
“This is a drastic step, but better than having your home repossessed - and your credit record very badly damaged. And all the banks have ‘distressed seller’ programmes specifically intended to assist owners who find themselves in this position
“In any case, if you keep your bank informed, and can show that you are really doing whatever it takes not to default entirely on your home loan repayments, it is most unlikely that you will be put on the defaulters list. At the very least, you will be given time to sell your home yourself, and have a good chance of getting a price for it that at least covers what you owe the bank.”