What to do if you’re struggling with bond repayment

Article summary

• Don’t panic. You can negotiate with your bank to restructure your payments.
• Banks will be more understanding because of the economic difficulties people are experiencing in the post-lockdown period.
• You always have the option of selling your home and using the funds to pay outstanding debts.

For many, it’s their worst nightmare come true. The home that you have invested so much is suddenly at risk. Images flash through your mind of your home being taken away as you are thrown out onto the street.

But it doesn’t have to be that way. You have options. Here’s what you can do.

Note Avoid getting into such a situation in the first place by budgeting correctly. You can use our Bond Repayment Calculator to determine what you will have to pay on your bond.

Your first resort: Negotiate with your bank

We live in tough times. The lockdowns have had a devastating impact on the economy, resulting in the loss of jobs and a high cost of living.

Banks understand the situation and may be more willing to cut homeowners some slack.

• Act quickly if you see problems on the horizon. The bank usually makes contact as soon as a single bond payment is missed, and the situation escalates from there.
• Be open and honest with the bank. Like you, they’d prefer to avoid the legal complications that occur if you can’t pay your bond.
• Don’t let emotion get in the way. As much fear and frustration as you may be feeling, don’t let it impact negotiations. Remember it’s not the bank’s fault that you can’t keep up with your repayments.

The bank may be open to the following options:

• Extend your loan. The bank could extend your loan for up to 30 years. Of course, this means higher payments for you in the long run, but it gives you the breathing room you need.
• Holiday period. The bank may be willing to grant a period of reprieve, in which you don’t have to make bond repayments. This could be a period of several months. The interest will build up but you will have a chance to get your finances in order.
• Credit insurance. Some home loans have built-in credit insurance that will help cover bond repayments over a certain period.

The last resort: selling the home

It may be a sad state of affairs, but it means you won’t be homeless.

• The bank usually sends about three warnings regarding bond arrears and then gives you a 30-day period to resolve the issue.
• Once this time is up, they start to take legal measures against you, such as requiring that you give them Power of Attorney to sell the home.
• If you see no way out of the situation, it’s best to try and sell the home before the bank has to take legal action against you.
• An estate agent can help you sell the home for as close to its market value as possible, and you can use the funds received to pay off outstanding debt.

Prepare yourself by getting the best deal on your bond

Prepare for the unexpected by ensuring you get a bond with low-interest rates. We can help you get the best deal by submitting your bond application to multiple banks, allowing you to compare deals and choose the best one.

We also offer a range of tools that can make the homebuying process easier. Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.