What to do if you're unable to pay your home loan

There is hope if you're unable to pay your home loan during the COVID-19 pandemic. If you find that you can't repay your bond, there are several steps you can take to make sure you don't fall into arrears or end up in a tight financial situation.

If this has already happened to you, know that you're not alone. By May 2020, the COVID-19 pandemic affected the income of an estimated 25,8% of South Africans.

The first step to taking back control of your property investment is to recognise the situation you're in and understand why it's important to act now.

What happens when you're unable to pay your home loan?

It's human nature to hope for the best, which sometimes means that we're in denial of problems such as falling in arrears on loan repayments.

But not tackling your financial challenges immediately can negatively affect not only your finances but also your mental health and your family's happiness.

Falling behind on bond payments hurts your credit score and can damage your financial security to the point where you can't afford essentials like emergency medical care.

But the hidden impact of falling in arrears is the overwhelming stress it causes the homeowner. Whole families can feel the pressure of mounting debt, which creates tension in relationships.

The harsh reality for homeowners who don't take action to address financial issues with paying home loans is that they are gambling with their family's security.

That's why it's so important to realise that there is a way out - and that you have the power to change your situation.

Four things you can do when you can't repay your bond

1. Speak to your bank immediately

Take it from our principal estate agent Mark De Lange when he says "Don't ignore your predicament. Approach your bank immediately. They really want to help you."

Pick up the phone and contact your bank, even if the conversation is a difficult one to have. It's in both you and the bank's best interest to protect your investment.

Your bank might suggest extending your loan term, which gives you more time to get back to a healthy place financially.

Don't forget to check if your bank offers a holiday period option that allows you to delay payments for three to six months.

2. Cut extra expenses, even if it's hard

This is obvious advice, but it's often easier said than done. When you're unable to pay your bond, you'll need to take intentional steps towards cutting costs. That might mean sitting down with your family and reconsidering every expense.

Start by looking at non-essential expenses such as entertainment subscriptions, gym memberships, takeaways and eating out. Putting these activities on hold might feel like a punishment now, but with hard work your financial situation will improve, and you will be able to treat yourself again

3. Make a payment, no matter how small

When times are tough, we tend to hold on to everything we have. But the good news is that banks recognise the efforts you make to contribute to your bond repayments, no matter how small.

So, while you're in discussions with your bank for help, try to pay some money into your bond, even if it's not the whole monthly instalment.

Do this not just for your financial situation, but also for your own sanity. Any step forward is an improvement and can lighten your load.

4. Consider selling your home to get a property that suits you better

It might sound drastic, but selling the home you're currently occupying can often solve more than just your immediate challenge.

Many people who haven't been able to repay their bond during the COVID-19 pandemic were stretched thin financially even before the economic downturn.

Here are some of the benefits of selling your home during the COVID-19 pandemic:

• You can find a property to buy or to rent that better suits your needs and budget, now and in the foreseeable future.
• Any profit you make on the sale of your home can be used to pay other debts, improving your financial position and reducing stress.
• You will have a good enough credit record to be eligible to rent a property, instead of losing your home and having nowhere to go.

If you're ready to consider the selling route, make sure to reach out to an established estate agency with a solid reputation. It's also essential to be upfront with your estate agent about your situation so they can fast track the process.

Not sure what to look for in an estate agency? Have a look at what NS Property Solutions has to offer. You can also find out what your property is worth here.

Whether you choose to sell your home or cut costs while you work on a solution with your bank, the important thing is that you're taking action and moving forward.

If you need guidance, reach out to our knowledgable team, who can guide you as you start your journey towards greater financial health and stability.