Clients in financial difficulties in these tough times can get to keep their homes, provided they approach their bond lenders for help immediately.

 

The recessionary environment which has been aggravated by the Covid-19 pandemic, is putting financial pressure on homeowners, leaving many struggling to keep up with their home loan repayments and contemplating a forced sale.

Some are even facing the unfortunate reality of losing their homes and considering their options, including turning to their banks for assistance or selling.  For homeowners in this difficult position, banks and property experts offer the following tips to help them either keep their homes or at least retain their titles as homeowners by downscaling to a more affordable property.

  1. Communicate

Banks want to keep people in their homes and so encourage homeowners to contact them when they see they are approaching financial difficulties;

Banks have pro-active measures to identify and assist customers who show signs of financial distress, irrespective of whether the customer has missed a payment or not;

The banks’ offer a variety of assistance plans for customers who are in distress, with the aim that the customer overcomes the distressed situation and that they retain their homes;

It is imperative that homeowners contact their banks or home loan providers as soon as they realise that they are unable to make payment on their bonds – DO NOT wait until the banks’ collections and recoveries team or department, contact you.

  1. Enter into a new agreement

If homeowners are unable to pay the full instalment on their home loan, contact the home loan provider and enquire about arrangements that can be made;

Each customer’s situation is unique and it is important that the home owner engages with the financial institution;

Possible options available:

  • Limited period of lower repayment instalments;
  • Restructure payment plans;
  • Selling and moving to a more affordable home:
    • Contact a reputable estate agent to sell property privately;
    • Banks have assisted sales programmes;

The importance of ‘not leaving it till it is too late!” cannot be emphasized enough.  If the property is sold by the bank on auction, they might not get a good price and the homeowner will still be liable for any shortfall.

Remember to keep communicating with your bank, whatever option you are considering.

  1. Debt-proof your home

Prevention is always better than cure – and the best course of action is not to get into arrears in the first place.  If at all possible, when buying and once the property has been transferred – pay a larger deposit / make a bigger down payment – thereby reducing the monthly repayments / negotiating and securing a lower interest rate.

Although sometimes difficult, pay a little extra each month, so that this reduces the home loan terms and pay off the loan much quicker;   as well as building up a credit for when you might not be able to pay an instalment;

Homeowners can also consider making some extra money from their homes, by renting out any extra space.

  1. Refinance and consolidate debt

If homeowners have owned their property for some time, they have built up equity, with an amount available for refinancing.  Consider utilising this equity to consolidate debt, so as to reduce total monthly commitments.

  1. Consider downsizing

Owners of multiple properties to consider selling one to clear arrears.  If that option is not available, another option is to consider selling their homes, renting for a while and then re-entering the property market with a smaller property.

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