It\u2019s every homeowner\u2019s worst nightmare \u2013 realising that no matter how much you scrape and save, you just don\u2019t have enough money to cover your bond repayments. With the cost of living escalating every day, it\u2019s a situation that has become all too common in South Africa.<\/p>\n
Thankfully, experts say it doesn\u2019t have to be the beginning of the end for your home.<\/p>\n
Leonard Kondowe, National Admin Hub Manager for Rawson Property Finance, shares his advice on what to do if you find yourself in this scary situation.<\/p>\n
Step 1: Get in touch with your home loan financer\/bank<\/strong><\/p>\n \u201cIt can be very tempting for bondholders to just ignore the problem and hope their bank doesn\u2019t notice a missed payment or two,\u201d said Kondowe. \u201cThis is really the worst thing you can do, delaying the inevitable and putting your lender in a far less sympathetic position when they eventually contact you. It\u2019s far wiser to approach your bank as soon as you realise you\u2019re in financial difficulty, and leverage their experience to find a workable solution to tide you over what is hopefully a temporary financial crisis.\u201d<\/p>\n Some banks are able to handle enquiries about mortgage repayments via their call centre, but most will require you to visit your local branch and sit down with an expert. It\u2019s often easiest to start with a phone call and let the call centre direct you to the appropriate person or place.<\/p>\n Step 2: Be open and honest about your situation<\/strong><\/p>\n Once you\u2019ve found the right person to talk to, Kondowe said it\u2019s essential to be as open as possible and bring proof of the issues that are causing your current financial crisis. That includes documentation of your current income and any job losses, unexpected expenses or overwhelming debt.<\/p>\n \u201cThe most important thing is to be honest \u2013 don\u2019t try to manufacture a fake story for sympathy,\u201d said Kondowe. \u201cYour lender is going to require proof of any claims you make, and any lies or embellishments are only going to work against you.\u201d<\/p>\n Step 3: Work with your lender to find a solution<\/strong><\/p>\n While it\u2019s easy to think of your bank as the enemy, Kondowe said that really isn\u2019t the case for distressed bondholders.<\/p>\n \u201cBanks aren\u2019t in the business of repossessing homes \u2013 it\u2019s far more beneficial for them to help you over your rough patch, retain a loyal client and avoid the moral and legal dilemmas of trying to evict a person from their home,\u201d he said. \u201cAs such, they really do go the extra mile to help homeowners find sustainable solutions to their financial problems.\u201d<\/p>\n According to Kondowe, those solutions will vary based on your specific circumstances, but could include a temporary or permanent reduction in your monthly repayments, a brief repayment \u2018holiday\u2019, a debt consolidation proposal, or any one of a variety of other options.<\/p>\n In a worst-case scenario, your bank could even assist you in selling your property for the best possible price by offering prospective buyers preferential home loan rates.<\/p>\n Step 4: Understand any long-term effects on your bond<\/strong><\/p>\n No matter what solution you and your bank settle on, Kondowe said it\u2019s important to understand the long-term effects it will have on your bond.<\/p>\n \u201cAny reduction in repayments, unless followed by a proportional increase, will result in an extension of your overall bond term,\u201d he said. \u201cThis means you\u2019ll be paying more interest in the long-run, but that amount will vary depending on how much longer your term is. Make sure you understand this before signing on the dotted line and ask about alternatives if you\u2019re not comfortable with the numbers.\u201d<\/p>\n Step 5: Stick to your new agreement<\/strong><\/p>\n Once your bank has gone to the trouble of helping you find a solution to your financial crisis, it\u2019s important to do your part to stick to the agreement you made. If not, you could find yourself in even more of a pickle \u2013 and your bank is far less likely to be sympathetic the second time around!<\/p>\n \u201cRemember, you\u2019ll be signing a legal agreement with your bank and that can have serious consequences if you don\u2019t uphold your end of the bargain,\u201d said Kondowe. \u201cIf you have any doubts about your ability to follow through on the agreement, rather raise those questions before signing and explore any alternatives that may be available to you.\u201d<\/p>\n
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