Cape Town - The Covid-19 lockdown of 2020 still has many homeowners under financial pressure.
Salary cuts and even unemployment are still realities for families, and meeting home loan repayments is proving a struggle.
Some owners are even facing the unfortunate reality of losing their homes and considering their options, including turning to their banks for assistance or selling their properties.
And if this is the case, it is not the end of the world, despite how it may feel.
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For homeowners in this difficult position, banks and property experts offer the following tips to help them either keep their homes or at least retain their titles as homeowners by downscaling to a more affordable property.
Banks want to keep people in their homes and so encourage homeowners to contact them when they see they are approaching financial difficulty. Absa has proactive measures to identify and assist customers who show signs of financial distress, irrespective of whether the customer has missed a payment or not, says Geoff Lee, managing executive for home loans, retail and business banking.
“We offer a variety of assistance plans for customers who are in distress, with our ultimate aim being that the customers overcome the distressing situation and that they retain their homes.”
Echoing this, Buyisile Maseko, growth head at FNB Home Finance, says homeowners must contact their banks or home loan providers as soon as they realise they are unable to make payment on their bonds. “Don’t wait until the banks’ collections and recoveries team or department contacts you,” she says.
2. Consider entering into a new agreement
If homeowners find they are unable to pay the full instalment on their home loan, Lee says the bank has a variety of assistance options available to customers who are experiencing short-term financial distress. These can include a limited period of lower repayment instalments.
“Should the distress be of a long-term nature, we have a dedicated team to assist the customers in selling their property and moving into a more affordable home.”
FNB too, says Maseko, has several options available, especially if homeowners confront the debt issue before it escalates. Some initiatives to assist struggling home loan customers are restructuring payments, agreeing to interest-only payments for a time or reducing instalments over a specific period.
3. Consider selling before it is too late
If none of the bank’s options is suitable, homeowners whose accounts are up to date could sell their properties privately or with the assistance of an estate agent. Banks also have assisted sales programmes.
Owners who are selling due to financial difficulty should “not leave it too late”, says Lew Geffen Sotheby’s International Realty’s Jill Lloyd. If their property is sold by the bank on auction they might not get a good price and will still be liable for the shortfall.
“It is important not to get to that stage. Speak to an experienced agent and they will market your house and, if necessary, keep in touch with the bank to keep them from pressurising you… Agents are not going to advertise that you are under pressure. They are going to try to get the best possible price for you.”
4. Refinance and consolidate debt
If they have owned their properties for some time, homeowners could have plenty of equity. It could be as simple as calling a mortgage broker and seeing if they can consolidate your debts, Maseko says.
5. Consider downsizing
Maseko also advises owners of multiple properties to consider selling one to clear their arrears. If they don’t have this option then they could consider selling their home, renting for a while and then re-entering the property market with the purchase of a smaller home.