select
|

Keep calm and avoid repossession

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.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK