Consult your financial institution if you’re not finding it difficult to meet your bond repayments. Banks should consider all possible options to help homeowners through these difficult times. Discuss alternative arrangements with all your creditors timeously.
Consider increasing your loan term to 30 years if you can’t afford your bond repayments. It will reduce the repayments but push up the total price considerably.
If you’re able to, use your bond to consolidate your debts at a lower interest rate rather than paying off possibly more expensive car loans and interest on credit cards.
You can also take out a bond on another paid-up property to honor bond commitments in the short term, Swart suggests.
Draw up to 90 per cent of life policy’s investment value to supplement your cash flow for six or more months. If you have life cover for one million rand for instance and already have R100 000 in the policy investment account you can draw up to0 R90 000, Swart says. You can continue the policy; the insurer will reduce your cover to R910 000.
Stop annuity payments for a while and reduce investment payments where possible. You can stop annuity contributions for months or even years; your investment will simply grow at a slower rate until you start contributing again. You can similarly stop or reduce your unit trust payments.
“Use extra capital such as a bonus to reduce your bond,” Du Toit says. But if you have two or three bonds you’re struggling to pay it’s possibly better to put that extra cash in the bank account so you can meet your obligations in the coming months, Swart says. There’s no point in paying off R300 extra a month on one bond and being unable to pay your other debts.
Families should live within their means and budget carefully. “Leave your credit card at home,” Swart says. “All family members have to look where they can cut down on spending. For instance, sell one car and buy something cheap and economical when it comes to maintenance and fuel consumption”. In other words, forget about luxuries. For instance, stop your gym membership and rather go for a run or swim. Stop having drinks and snacks before supper and watch your energy consumption. “Make a list of the family’s non essential spending habits. They could amount to a bond repayment you couldn’t afford”.
If you’re facing sequestration you could contact the National Credit Regulator (ncr.org.za) to arrange payment of your debts with the help of a mediator. If you have received a lawyer’s letter of demand from your bank you can still reverse the repossession by contacting the bank and agreeing to reschedule the loan. Also speak to your bank if you think you may be forced to sell your house. Rather sell the house privately for a better price. Your bank should give you more time to do this if you can still pay off the interest on your bond.
- From Huisgenoot 22 May 2008
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