Bond payments - what to do when you can’t pay

With such tough financial times at present, more and more people are finding themselves in debt or financially strained.

Failure to pay home loan instalments can lead to the involuntary sale of one’s home- but this last resort and a lifetime filled with debt can be avoided as there are schemes to support people who find themselves in difficult financial situations.    

According to Richard Gray, CEO of Harcourts Real Estate South Africa, “It is so important for those individuals facing financial pressures to know the options that are available to them. Harcourts works in partnership with a number of banks which aim to assist such individuals and lead them out of debt.”

Reaching the stage where an involuntary sale or sale of execution is mandatory can be devastating. It involves a legal process by which the Court grants the bank authorisation to sell their client’s property in order to recover money that is in arrears.   In this process, the owner will not only lose their home, but their name will be listed with the credit bureau for many years. This will severely affects their credit rating and will most definitely create problems with all future financing of home loans, cars, the approval of credit cards and the opening of accounts. It could also affect their eligibility for employment and the renting of property.

Instead of waiting until it is too late, a property owner can rather choose a voluntary sales option which will see a bank and selected real estate agents extending their professional help to the property owner. There are a number of benefits that banks offer to distressed clients, some include: discounted commission from estate agents, discounts of existing loan balances should the sale of the property not cover the debt, and 0% interest on shortfall repayments and extended repayment periods. “Essentially, when a home-owner is going through a difficult time, this really should be the only option,” says Gray.

In many cases, distressed sales also offer potential buyers the opportunity to benefit in the purchase of the property. Some banks offer buyers up to 100% bonds on all distressed sale properties, as well as discounts off transfer costs and registration fees. These benefits, combined with a generally lower asking price are able to attract buyers and lead to the successful sale of the property – a win win situation for both buyer and seller.

The steps involved in the selling process are relatively simple but demand the proactive involvement of the bank, property owner and real estate agent. Harcourts, being a national Real Estate company has a service level agreement with the four major banks to help sellers market and sell their properties on the banks’ assistance programs. . The assigned estate agent will use all their resources to market and advertise the property in print and online mediums, as well as organise show houses and private viewings in the attempt to sell the property before the mandate expires.

“Harcourts, working together with banks and property owners, offers the best possible service and promise to do everything in our power to sell the property at the highest possible price in the shortest time-frame, ultimately positioning the property owner on the path towards a debt-free future,” concludes Gray.

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