Make home ownership an easy, enjoyable journey
Learn to become proactive when the financial crunch hits
Buying a house is one of the biggest milestones, but keeping that house in rainy days can be torturous.
Here we look at steps to take when facing a financial crunch and not able to keep up with monthly bond repayments. It is important that you become proactive when you get caught up in a sticky financial position that results in a failure to pay your bond.
First, you must contact your lender as soon as possible and inform them of your situation.
Don’t treat the bank as the bad guy – the lender will often hear you out than go through the process of getting a debt judgment against you and then possibly having to repossess the property.
Here are some of the options the bank can present to allow you to keep your treasured home:
• Recapitalisation
Your bank, depending on your situation, might be willing to agree, for example, for you to pay the interest portion of your bond until your financial position improves. However, the capital portion of your bond will then be added to your loan, and this will see you take longer to pay off the home loan.
• Restructuring
Another option your lender might give you is to extend your loan repayment period from 20 years to 25 or even 30 years. This will see a reduction in your instalment.
Simon Stockley, the co-founder and former chief executive of SA Home Loans, said should it become impossible to maintain your home loan repayments, communication is key.
“The bank or mortgage provider doesn’t want to take back your home, and they only do this as a last resort,” he said.
• Legal and tax answers to your burning questions:
How many missed payments before repossession?
The foreclosure process is initiated after three or more months of missed payments.
Can a house be saved from repossession?
One of the biggest mistakes people make when they cannot make their bond payments is not contacting their bank to discuss a way to move forward.
There are options available to you where the bank would prefer to help you settle your debt.
Can a house be sold before repossession?
Yes, some banks offer assistance in selling a home on the open market, bringing in more money and protecting the debtor from what could be long-term financial ruin should their home be repossessed.
Can you appeal a repossession order?
Yes. You can apply for debt review and pay your bond under this arrangement. There are options to explore to appeal a repossession under section 129.