Blog | I am unable to afford my monthly homeloan re-payments, what options do I have?

For many people, a bond is their largest monthly debt instalment. Due to the current economic woes caused by the Covid-19 pandemic many people are struggling to pay their monthly bond instalments and have fallen into arrears or are simply not paying the monthly instalments.

It is possible to avoid foreclosure by selling your property, settling your bond and rehabilitating your finances.  You can either achieve this by selling your property via the traditional means i.e. appoint an estate agent to market the property and hope that you can sell the property speedily and for more than is owing to the bank, or you can approach your bank and ask for assistance in disposing of the property via their distressed sales programme. All the major retail banks have their own version of the distressed sales programme, but the process listed below is common to most.

  • Your property will be marketed by the bank’s panel of authorised estate agents, usually at an agreed discounted rate.
  • The bank’s consultants will assist you during the sale process.
  • If the sale price is less than the outstanding balance on your home loan account, they  will offer you a discount on the balance (shortfall amount) and will sign a separate agreement (often interest free) for the remaining debt.
  • The bank manages the transfer and conveyancing via their approved panel of attorneys on your behalf.

The benefits of approaching your bank for help via their distressed sales programme is that you will stay in control of the sale of your property and should achieve the best market related sales price. Expenses like rates clearance and compliance certificates can be paid from your bond account and your name can be cleared on the credit bureau once the shortfall has been paid.

Should you choose to not sell your property or approach your bank timeously for assistance, the bank may repossess your property. This happens when the bank takes legal steps to serve the owner with a summons, takes judgment and eventually attaches the property. The bank then instructs a sheriff of the court to sell the property at a public auction. The bank is entitled to attend the auction and to ‘buy the property back’ if the highest bid at the auction is not sufficiently high enough to cover the amount outstanding to the bank. A property becomes a Property in Possession (PIP) when the bank ‘buys the property back’ at a sale in execution (public auction).

In doing so the bank then becomes the legally registered owner of the property and gives the ‘previous’ owner notice to vacate the property. The property may be advertised and some banks may provide lists of repossessed properties to certain property professionals in order to sell them to a new owner.

Chatting to your bank as soon as you start having difficulty with paying your monthly bond instalment clearly has its advantages and is strongly recommended.

STBB are on various bank distressed sales panels nationally. Should you have any queries please contact your local STBB office for advice.