Tips to keep up with your bond repayments in difficult times

Your home loan is arguably your most important debt and asset. Staying on top of home loans repayments should be a priority, as normally one of your biggest monthly contributions; it is difficult to get back on top if you fall behind.

“Everyone is stretched financially at some stage. With holiday debt still around, school fees just paid and interest rates up you may find yourself with no breathing room and your biggest and most important debt, your home loan, is suddenly a big commitment,” says Patricia Temba, head of collections at FNB Housing Finance.

The very heart of the issue is that your income needs to exceed expenses. The only way in which to make this work is to increase your income or lower your expenses.

Be overly strict for a few months – make the money you earn work for you by implementing strict measures to get back on top of your payments.

“Print out a bank statement and look at each expense leaving your bank account,” says Temba. “More than likely unnecessary expenses are coming off, whether it is pay TV, entertainment or even unnecessary banking fees, each rand saved will help. There is not much point in having Pay TV or ordering pizza in if you don’t have a home in which to enjoy these luxuries.”

It’s important to note that strict economies aren’t forever – just until you are back in a comfortable space. So, look at places to cut down – there are some necessary expenses that you can’t forgo. However, there are usually places to negotiate and cut down.

“Insurance is one place that is open to negotiation, spend some time gathering quotes and renegotiating your insurance contracts,” says Temba.

Another place to cut back on expenses is services such as cell phone bills. Having a cellphone is considered a necessary expense, but racking up huge data costs to surf the internet or chatting for hours to friends is not necessary,” says Temba.

You can also look at water and electricity consumption. Just by being more vigilant you can save on these expenses.

You can also pause or temporarily reduce contributions to retirement annuities and other savings accounts.

“This is not a long term solution to solve your cash flow problems and certainly you shouldn’t be tempted to cash out as there are tax implications. But reducing your savings commitments for a few months may give you breathing space until you are back in a position to service your debts and continue investing and saving,” says Temba.

And make sure that as soon as you are in a position to, you reinstate all your investments and savings contributions.

If you are really not getting on top of your expenses and you are consistently exceeding your income, you will need to look at other ways in which to increase your earnings.

“Again this is not a long term solution, but can help relieve the immediate pressure until you are able to make your responsibilities again. Consider working overtime to earn a bit more or another possibility is to cash in leave days, if you have the option,” says Temba.

Other ways to earn a bit more cash could be to rent out an extra room for a few months.

“Don’t be tempted to miss or stop paying your bond all together,” says Temba. “Even partial payments show good faith and interest will accumulate more slowly,  helping you to catch up.”

However, partial payment isn’t a long term solution. If you are really struggling speak to your bank. Admitting you need help as soon as you realise that you are heading into financial difficulty will go a long way to protecting your home.

“Your bank will make provisions for you to ensure that you keep your home. Repossession is the last resort and banks will assist you in every possible way to ensure that this doesn’t happen,” says Temba.

“There are a number of solutions the bank can offer to help you if you are having financial difficulties, however it is up to you to also proactively take steps to help yourself out of the position you have found yourself in,” says Temba.

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