Talk to your bank when struggling to repay your bond

There is a regrettable tendency among those who struggle to meet their bond repayments to keep silent about their problems until it is too late to carry out an effective rescue exercise.

Situations of this kind, says Tony Clarke, Managing Director of the Rawson Property Group, can be avoided if the struggling bondholder would just talk to his bank and make a provisional new deal.

"The Rawson Property Group's bond origination division, Rawson Finance, reports that the banks, almost without exception, have been willing to help struggling bond payers provided that there is some indication that they will recover their ability to repay within the foreseeable future", said Clarke.

Although it is highly unlikely that the bank will reduce the bond interest rate they originally negotiated, adds Clarke, they have shown themselves willing to allowing the bond holder to pay the interest only for a specified period and/or to extending the repayment period, thereby reducing the monthly payments.

In certain cases, says Clarke, the banks, if approached early enough, i.e. before the bond payer has fallen behind on his payments, have been willing to carry out a debt consolidation exercise in which they actually increase the amount of the bond and assist the client to pay off hire purchase and personal loans taken out at high interest rates.

A consolidation of this kind, says Clarke, can reduce the client's monthly pay-outs because the interest rate on the bond is so much lower than that of most short term loans. However, in such cases the client is almost always forbidden to take out any further loans of any kind for a stipulated period - even signing on for a new store account or credit card is forbidden.

"As has been said time and again", said Clarke, "the banks are not at all keen on repossessing properties and regard this very much as the last resort. The process takes up a great deal of administrative time for very little reward as the properties very seldom sell at their true market price, which can cause further repayment problems."

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us