Act before you fall behind on payments
The steep rise in interest rates impacted many household budgets. For some, this might require some readjusting of behaviours to rectify their financial situation.
The steep rise in interest rates impacted many household budgets. For some, this might require some readjusting of behaviours to rectify their financial situation.
And for others, it might be time to reach out for help before the situation becomes too severe.
Regional director and CEO of RE/MAX of Southern Africa, Adrian Goslett, advises homeowners to take a realistic look at their finances.
“Make sure you can afford to keep up with the repayments on your home loan and other debts.
“It is vital that homeowners in financial trouble take action before the situation slips out of their control. Act decisively, take control of the situation, and consult with people who can assist,” he advises.
Goslett adds the sooner a homeowner acts, the better their chances are to rectify their financial situation and to start afresh.
“It is best to be upfront with the bank rather than defaulting on a payment without notification.
“If they left the situation to run its course, and the homeowner is not communicating with the bank, could this result in the homeowner losing their property. It could potentially also lead to a tarnished credit record and blacklisting.
“Even renting a property could become difficult because most landlords do credit checks on their potential tenants,” Goslett cautions.
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He also addresses a common misconception that the bank will repossess a property as soon as a homeowner communicates their distress.
“Banks do not really benefit if their client’s home is repossessed. It is much more beneficial for the bank if the homeowner continues paying off their debt over time. That’s why they will assist where possible,” says Goslett.
According to Goslett there are a few ways in which a bank might offer assistance, including:
• Rescheduling/restructuring debt
• Repayment arrangement options
• Renegotiating the term of the loan from 20 years to 30 years
• Offering to list the home on the bank’s distressed property programme.
“Once the homeowner tells their bank about their financial situation, the bank, can offer solutions best suited to the client’s needs.
“Often, the most effective method to keep the homeowner’s credit record intact is to sell the property through the bank’s distressed sales programme.
“This does not mean they will sell the home at an auction or without the owner’s consent. The bank works with agents to set a fair price the seller has to agree to before the deal can go through. In certain cases where the homeowner has built up enough equity, they may be able to also pay off some other debts.
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“This option could provide the homeowner with an opportunity to start with a clean slate,” Goslett explains.
As one of the approved real estate agencies for South Africa’s four major banks’ distress sales departments, RE/MAX of Southern Africa is the only real estate company in the country with a dedicated distressed property department.
The agents are qualified as certified distressed property advisors (CDPA) trained to assist homeowners with these specific types of properties and situations.
“Our agents are best positioned to assist homeowners who find themselves in these situations and will help get the home sold quickly if that is the best option for them,” says Goslett.
For those who are unsure of what the correct next step is, Goslett advises that they make use of a professional debt counsellor who can provide further guidance.
“A debt counsellor will assist the homeowner in reviewing their finances and can help them submit a proposed repayment plan to the relevant creditors if need be,” Goslett concludes.
