With lockdown and its economic fallout causing untold damage to the economy, more and more South Africans are finding themselves on unpaid leave, reduced salary packages or laid-off entirely.<\/p>\n
This is places many homeowners under severe stress when it comes to keeping up with their mortgage repayments and could well be deterring new buyers from entering the market as well.<\/p>\n
Under difficult circumstances like these, it\u2019s easy to give in to feelings of hopelessness. However, according to Leonard Kondowe, National Admin Hub Manager for Rawson Finance, there are actually some very achievable solutions for homeowners and prospective buyers trying to navigate home finance in the time of Covid-19.<\/p>\n
\u201cThe most important thing for existing homeowners to know right now is that there is hope \u2013 they are not powerless in the face of their challenges,\u201d said Kondowe. \u201cIn fact, lenders are being extremely supportive of clients in financial difficulty due to the impact of Covid-19.\u201d<\/p>\n
Many loan agreements have built-in credit insurance which could help homeowners cover bond repayments until they\u2019re back on their feet. For those without insurance, however, Kondowe said payment holidays and bond restructuring are both popular compromises offered by lenders.<\/p>\n
\u201cKeep in mind, any delay to your repayments will increase the total amount of interest you pay over the lifetime of your loan,\u201d he pointed out.<\/p>\n
\u201cThat\u2019s a far better option than having your home repossessed, but it\u2019s not something to be taken lightly. I\u2019d urge homeowners to still prioritise their home loans, and pay as much as they can afford to, rather than taking undue advantage of debt restructuring and adding to their financial burden down the line.\u201d<\/p>\n
Kondowe urges homeowners in genuine financial distress to approach their lenders as soon as possible, however.<\/p>\n
\u201cDon\u2019t bury your head in the sand, fall behind on your mortgage payments and just hope all will be forgiven,\u201d he said. \u201cLenders are open to compromise, but they\u2019re not going to overlook those who default without explanation.\u201d<\/p>\n
When approaching your lender, Kondowe said documentation showing your income and expenses, and any special circumstances that may have contributed to your financial difficulties \u2013 like retrenchment \u2013 is vital.<\/p>\n
\u201cYou need to be able to explain why you can\u2019t meet your obligations, and back that explanation up with real facts and figures,\u201d he said. \u201cNine times out of ten, if you can prove genuine financial distress, your lender will be willing to help you out.\u201d<\/p>\n
Responsible finance for prospective buyers<\/strong><\/p>\n Prospective buyers may view the current situation in a different light, finding great opportunity in the reduced prices of distressed properties and record low interest rates. For those wary of taking on debt at present, however, Kondowe said a few careful steps can help prepare buyers to responsibly take advantage of what could be the investment of a lifetime.<\/p>\n \u201cStep one is to get prequalified,\u201d he said. \u201cThis gives you a clear idea of your buying power and should bring to light any issues with your credit record that need attention. From there, with the help of your bond originator, you can work on your financial behaviour to minimise expenses and maximise the appeal of your financial profile.\u201d<\/p>\n This, Kondowe said, not only gives buyers the best chance of favourable interest rates from lenders, but also enables them to make informed decisions on their affordability.<\/p>\n \u201cDepending on your circumstances, you can choose to play it safe by applying for a bond below your maximum affordability with a sizeable deposit, or take advantage of the current lending climate to secure a loan of up to 105% of your purchase price,\u201d he said.<\/p>\n \u201cIt\u2019s not a one-size-fits-all situation, but your bond originator can help you find the right balance for your finances and lifestyle. There are great opportunities out there at the moment. Don\u2019t let fear stop you from taking advantage in a responsible manner.\u201d<\/p>\n
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