Don't hide when you're in default

Homeowners who are behind on their bond repayments too often take the head-in-the-sand approach and leave their number-one asset exposed to repossession.

Berry Everitt, MD of the Chas Everitt International property group says: "Home ownership requires proactive financial management even when the payments are on time, but even after the bank contacts delinquent owners about late payments, many of them simply refuse to acknowledge the problem and go on to lose their homes with barely a protest.

"In fact, what borrowers should do at the first sign of trouble is contact their lender themselves, and ask about repayment alternatives that will enable them to reduce instalments and keep their home.

"And if you do get a phone call or a letter from the bank about missed payments, you should not ignore it, but act on it right away. If you can't make payments you need help, so ask for it."

On the other hand, he says, you shouldn't panic. Banks will generally go to great lengths not to repossess your home as this means much more work and expense for them.

"Also, you should know what 'late' really means when it comes to your instalment. It may be late if it's not paid on the due date but most lenders will offer a grace period of a week or two before any bells go off and at least a month before reporting you to the credit bureau and contacting you."

At this stage, says Everitt, you may want to consider restructuring or refinancing your home loan - but not to borrow more money. "If you have lots of debts, you should do the sums to see if debt consolidation will help, and if you should perhaps extend the life of your home loan from 15 back to 20 years, or perhaps from 20 to 30 years.

"Your best bet is to get qualified financial advice, and to keep your lender fully informed until you can get your repayments up to date. You should also keep written records of all your contacts with the bank and any agreement as regards your debt repayment plans.

"And above all, avoid quick-fix scams. When your bank balance is skinny, you're at your most vulnerable to debt reduction come-ons, but you probably didn't get into trouble overnight, so you shouldn't expect to get out instantly either. Debt reduction requires discipline."
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