The average home loan period is 20 years, a relatively long period during which there are likely to be several financial ups and downs.
Steven Barker, head of home loans at Standard Bank, says that should customers find themselves in a difficult position, it is important that they communicate openly with their bank.
Chances are that homeowners will face tough times at some stage during this time span, either because of external economic conditions or personal circumstances.
Steven Barker, head of home loans at Standard Bank says that should customers find themselves in a difficult position, it is important that they communicate openly with their bank.
“Many people fear telling their bank that they are not in a position to pay back a loan, however, the more cooperative customers are, the more likely they are to keep their homes.
“It is important to remember, it is not in the bank’s interest to repossess properties – our aim is to try to help customers keep their properties wherever we can.”
He advises customers to be absolutely honest with the bank.
It’s no good omitting information because you think it will buy you more time, he says.
For example, it’s not wise to tell your bank that you cannot pay just this month, if you have lost your job and will not be able to pay until you have found another one.
Be upfront and honest, so the bank is aware of all factors that can affect you paying off your home loan, he points out.
He says that your bank will need to understand your exact circumstances so that it can come to an arrangement with you.
The nature of this will differ per customer. Some may get a payment holiday, during which time they need not make any payments, while others may benefit from an extended home loan term with lower monthly payments.
Some may get a payment holiday, during which they need not make any payments, while others may benefit from an extended home loan term with lower monthly payments.
Some financially distressed customers may be allowed to make part-payments.
Repayments can also be staggered. Although the bank requires monthly repayment, nothing prevents you from paying weekly if this will assist with cash flow – for example if you find new employment that pays at the end of each week instead of monthly. As long as your smaller payments add up to the monthly amount, no fees or penalties apply.
“Some customers under severe financial duress will have to sell their properties because they are simply too expensive, but this is always a last resort, and is taken in the customer’s best interest.”
Standard Bank’s EasySell process is in place to help such customers, by listing their properties with reputable estate agents who offer a pre-negotiated discount on the sales commission.
Standard Bank via the EasySell programme also offers customers the benefit of reducing the outstanding balance. To date EasySell has assisted in excess of 3 000 customers via this programme.
A major advantage of engaging honestly with your bank at the first hint of financial difficulties is that it can help you avoid blacklisting, which can have longer term impacts on your financial future.
“Don’t wait until it is too late, let us know that you will be facing problems so that we can help you before you get into a deeply stressful situation,” advises Barker.
Standard Bank can also offer other options to heavily indebted customers. For example, it can help consolidate debts and free up cash flow.
“Your first call when you realise it will be difficult to meet your home loan repayments should be to your bank and we will make every effort to re-structure your loan,” he adds.
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