Being proactive can save repossession of property

The past two years have taken an economic toll on the world. SA, in particular, has been struggling with real economic growth for the past decade. Before the pandemic the country not only slipped into a recession but was also downgraded to junk status. The impact of these downgrades meant investing in SA was seen as an even bigger risk.

For the property sector, this meant that the market for new sales would shrink due to a lack of confidence from potential buyers.

This also meant that existing homeowners would struggle to keep up with their monthly bond repayments.

In efforts to cushion their mortgage holders during this period, banks offered their clients voluntary payment holidays.

This is mainly to prevent defaults on instalments, as it would have an effect on the client’s credit records. All praise to the banks for this proactive action, it shows that their motive is to preserve their client’s ability to continue servicing their home loan repayments.

It’s important for homeowners to understand this motive, as it highlights that banks are not in the business of repossessing properties but are always willing to help you keep up with your repayments.

In most repossession events, the bank rarely recovers the value of its loan as the property is sold as a distressed asset, often at 60% to 70% of its market value.

The lower selling price of the property also means the value of other properties in the area will be affected.

Some buyers surrender to the temptation of trying to hide from reality and not communicating with the bank.

This will always be detrimental to you, as you will lose any chance of preserving the value of your property and salvaging potential proceeds from selling the house.

What’s even more detrimental is that your credit record will suffer long-term damage and through the process could take you years to recover.

Conclusively, this highlights how proactiveness can save your property from getting repossessed. Reach out to the bank and make them aware of any financial constraints preventing you from paying your bond instalments.

By doing this, you give yourself and the bank enough time to find amicable solutions suitable for both parties.

If your financial difficulty is temporary, you have the option to request a restructured bond term. You can ask to have your repayment period extended and lower your monthly instalments to an amount you can afford.

In the event where your situation is prolonged, the option will be to work with the bank to help you sell your home without a distressed factor. The bank’s support could be in the form of debt forgiveness on outstanding rates plus more favourable home loan terms for your property’s potential buyer.