Many a property owner presently faces the brunt of increasing interest rates. At the time of acquiring a property many prudent investors make provision to absorb slight increases. Any increases beyond 2 %, as recently announced, make serious demands on the average family’s household budget.

You might be in the unfortunate position where affording your homeloan is causing sleepless nights.Financial institutions are fully aware of the present economic climate and the effects on the average consumer.

If you are already finding your bond repayments high, or you’re feeling slightly more under pressure… you should try to re-negotiate your bond. They are aware of how easily the average family can become overextend, especially with the cost of living. Believe it or not, the majority of bondholders would prefer to work with you to resolve the arrears in an amicable manner. Repossession is a last resort for most banks and even then they will try find a workable solution to avoid this. Repossession in most cases represents a loss for banks. Most banks will furthermore only institute legal action after 3 months of missed payments, especially if the consumer has been avoiding the matter. If you are in a position where you are missing payments or find yourself in any arrears, here is some advice;

1. Be brutally honest with your bank and spell out the situation you are facing.
2. Discuss any alternatives or assistance they might be able to give.
   
3. Take advantage of today’s competitive financial arena where most banks, if pushed, will re- negotiate a lower mortgage rate or a longer repayment period.
   
4. In some instances, banks are willing to extend the period of your loan from 20 years to 30, creating a significant reduction in your monthly payment. Keep in mind this increases the final amount you will end up paying over the life of the loan.
   
5. Reassess your home budget and trim and reduce household expenses where possible. This is especially important in the Festive season when the urge to overspend will need to be tempered.

Your last resort is of course the sale of your property. If you can’t avoid this scenario, ensure you get the right advice and assistance from a professional to guide you through the process. Remember renting for a time to get back on track is not the end of the world. One thing you can be sure of is that the market and economy will change.

Written by: Grant Rea
Tel: 074 401 8840
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