Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

You must tell bank of financial stress

19 Jun 2014

While the general economic climate and the property market is improving slowly, there are still those who are finding themselves in financial distress and cannot pay their bond repayments each month in full. If and when this happens, they must contact the bank that holds the mortgage immediately and not wait until letters of demand or legal notices arrive, as this may be too late.

Homeowners in distress should contact all creditors before the letters of demand start arriving. Creditors are not sympathetic to a person’s plight if they are the ones having to follow up on payments.

This is according to Annette Evans, regional general manager for the Institute of Estate Agents, Western Cape, who says all bonds are granted on the basis of the financial conditions of the applicant at the time of applying, so if these circumstances should change, where the person is earning less or they have lost their job, they must let their bank know immediately.

Most banks are amenable to making payment arrangements and assisting those in financial difficulty, as long as they are contacted first and it is not the bank having to ‘chase’ payments from the bond payer.

The banks will sometimes offer ‘payment holidays’ where up to six months’ of half payments or three months’ grace can be given to those who are struggling to pay their monthly bond repayments.

She says do not wait until a legal notice arrives, because (a) you will be paying collection attorneys’ fees and (b) they will not be likely to discuss things or negotiate a repayment plan.

It is better to sell the house before any chance of legal collections begin as this will enable the owner to sell at a market related price, instead of a much lower price being achieved if the property is sold by the bank. The owner might find himself still owing the bank money even after his property has been repossessed and sold in execution, says Evans.

Another option to get one’s debt and finances in control is to consult a debt counsellor, who will write to all creditors and make payment arrangements on the debtor’s behalf. They will, however, charge a fee, so if at all possible, she advises that homeowners in distress contact all creditors before the letters of demand start arriving. Creditors are not sympathetic to a person’s plight if they are the ones having to follow up on payments.

“Rather stay proactive and as much as possible in control of the process of selling the property and settling debts, than putting it in the hands of others, and never wait for a desperate situation before asking for help,” says Evans.

Print Print
Top Articles
Yearning for a country home where you can relax and unwind away from the city grind? With affordable prices, these homes in Greyton offer a soothing lifestyle…

Are the waves calling you? With prices below R1m, these lock-up and go apartments in the Eastern Cape’s Jeffreys Bay are perfect for a holiday chill-out…

The towns in the Winelands offer a variety of property opportunities from modern apartments for first-time buyers to luxurious homes in lifestyle estates.


Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.

Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724