How to handle a break-up with your bond
FOR APPROVAL PSE
Every buyer goes through a “honeymoon”
period when their monthly bond repayment seems a small price to pay for the
pleasures of home ownership.
But the romance can sour rapidly if that
instalment becomes a burden - which can happen quite easily if your work hours
get cut back, you really have to buy a new car or an addition to the family
puts new demands on your household budget.
“And the problem is not going to go away
by itself,” says Rudi Botha, CEO of leading bond originator BetterBond. “You
need to acknowledge it and assess your options for dealing with it, as soon as
possible.”
The signs that affordability is becoming
a problem include making your bond repayment later and later each month,
cutting back the repayment of other debts so you can afford the bond repayment,
or perhaps even “borrowing” from your credit card or overdraft facility to make
up a shortfall on the instalment.
If this is your situation, he says, your
first step is to work out how long your cash “crunch” is likely to last. An
interest rate decrease may be on the way, or you may soon be due for a salary
increase. Perhaps you’ll be able to ease the situation quite quickly by cutting
family spending, by taking a part-time second job to pay off your short-term
debts, or even by getting a new, better paid, full-time job.
The second step is to stay calm, even if
it looks as though you’ll be in a bind for quite some time. Take charge and ask
your lender about options for lowering your monthly home loan repayment. You
may be able to extend the term of the loan, for example, or “cap” it for a
while and only pay interest until your financial circumstances improve. If you
have owned your home for quite some time and have good equity, you may even be
able to refinance the loan at a lower interest rate.
Thirdly, says Botha, you may decide that
you really can’t manage the bond repayments at this stage and should rather
sell your home, pay off your debts and start over.
“If that is the case you should seek
professional help through one of the bank assisted-sale programmes to get the
property sold at the best price and in the shortest possible time. This will
enable you to keep your credit record intact and maintain control of your
financial destiny.”
Whatever
you do, he notes, you should not just stop paying your instalments and wait to
see what happens. “The last thing the bank wants to do is repossess your home,
but once the letters of demand start coming, it will be difficult to convince
anyone that you are taking your obligations seriously and that any plan you
have for making up the late payments is actually workable.
“And
if you let your home be repossessed, you will lose whatever equity you have
built up in the property and your credit record will be ruined for years. What
is more, if the property is then sold at auction for less than you owe the
bank, you will still be liable for the difference.
“However,
if you are realistic about your financial circumstances and quick to make use
of all the help that is available if you find yourself in trouble, you will
soon be back on your feet and ready to buy your next home.”
Issued by etc
Contact her today for no cost stress-free home-buying.
Anne-Marie Bamber
Home Loans consultant
Tel: +27 (0)21 851 3568 | Fax: +27 (0)21 441 1494 | Cell: +27 (0)82 071 1665
E-mail: anne-marie.bamber@betterlife.co.za
