Dealing with retrenchment
STRESSFUL: YOUR HOME LOAN IS LIKELY TO BECOME YOUR BIGGEST WORRY IF YOU LOSE YOUR JOB
The banks offer different options to help financially-distressed consumers.
Dealing with your home loan should be considered in the context of your overall debt profile and the size of the retrenchment payout you will be receiving. This is according to Craig Gradidge, executive director of Gradidge-Mahura Investments. “If your retrenchment package after tax is a lot bigger than the outstanding home loan, settling the loan becomes an option,” he said.
Andrew van der Hoven, head of home loans at Standard Bank, said unfortunately many people fear telling their bank that they can’t make a payment on a loan.
“However, the more cooperative customers are, the more likely they are to keep their homes. Remember it is not in the bank’s interest to repossess properties,” he said.
The banks offer different options to help financially-distressed consumers.
The option chosen will depend on your personal credit profile, your history with the bank and your personal circumstances.
Geoffrey Lee, managing executive of home loans at Absa, said they offer both short-term and long-term plans.
Thozama Mochadibane, head of customer delight at Nedbank Home Loans, has strongly advised homeowners to contact their bank immediately, noting that their credit profile was likely to be impacted negatively if they start skipping payments or short-paying without making prior arrangements with the bank.
What are your options?
A payment holiday – during this time you may be allowed to skip payments entirely or to make partial payments. If you have been retrenched, Absa offers reduced repayments for six to 12 months. These payments may be as low as 25% of your original monthly repayment, depending on your affordability.
Nedbank clients can suspend their bond repayments while awaiting a retrenchment payout.
If you are planning to settle the bond with your payout, cancellation figures will be issued, and the bank will initiate the bond cancellation process.
An extended repayment plan – this has the effect of reducing your monthly payments until you are financially stable again. When you do this, your repayments are offset against the interest owing, so the overall debt does not grow rapidly due to compound interest.
Lee says Absa allows you to extend your home loan up to 30 years.
Selling the property – this is the worstcase scenario and usually the last resort.
Van der Hoven says Standard Bank’s EasySell process helps ensure that the best possible price is obtained for the property and the bond is settled to get the customer’s credit record back on track.