South Africa’s economy has experienced challenges in the recent past. These challenges have negatively affected the economic growth and outlook of the country. The result of this situation has seen many people lose their income from business or even formal employment. For those with properties bought through bank loans, loss of income translates into failure to meet home loan repayments. This is how you can you can avoid losing your home when you experience financial constraints.
- You can choose to surrender collateral such as a life assurance policy with an investment component to the bank. The bank will cash in the policy and use the proceeds to cover your home loan repayments. Remember that you will lose part or all of your policy’s value if you surrender it before it matures.
- Voluntary debt review with the banks debt counsellors should be considered. The aim of voluntary debt review is to draw up a budget and trim your expenditure so that you can meet your monthly home loan repayments.
- Most lenders are ready to recapitalise your home loan until your financial situation improves. Recapitalisation refers to an agreement with the lender which allows you to only pay the interest portion of your home loan instalment each month until your financial situation improves.
- Restructuring your home loan over a longer period is another alternative worth considering. Home loans are usually scheduled over 20 years, but banks are amenable to restructuring your home loan over periods of up to 30 years. However, although a longer repayment term will reduce your monthly repayments, you will end up paying more in interest over the long run.
- One other option you should consider is forbearance. Forbearance means the lender may allow you to reduce or suspend payments for a short period if you can prove that you are expecting an insurance pay-out, a retrenchment package or a divorce settlement.
The tips provided above will assist you to hold on to your valued home.