Expert tips on how to avoid your home from being repossessed

The prospect of losing your home due to repossession can be a terrifying one. Repossession is when a lender takes possession of your property because of a failure to keep up with home loan payments. The good news is that repossession is preventable if you take action early enough. 

Here are some tips on how to avoid your home being repossessed:

• Communicate with your lender

Taking proactive steps and maintaining open communication with your lender is crucial if you find yourself struggling to make your home loan payments. Remember, addressing the issue directly is the key to finding a positive resolution. By actively collaborating with your lender, you increase the chances of reaching a mutually beneficial solution.

One potential avenue to explore is renegotiating the terms of your loan. You can discuss options such as requesting a lower interest rate or extending the repayment period, which may lead to more manageable monthly payments. Your lender might also be willing to consider partial payments or work out a customised payment plan. Honesty and transparency regarding your financial situation will demonstrate your commitment to finding a suitable resolution.

• Create a budget

If you're struggling to make your home loan payments, it's important to take a close look at your budget. Are there areas where you can cut back on expenses or find ways to earn more money? By creating a budget and sticking to it, you may be able to free up some extra cash that you can put towards your home loan payments.

Start by listing all of your monthly expenses, including your home loan payment, utilities, groceries, and any other bills or debts. Then, look for areas where you can reduce your spending. For example, you could cut back on eating out or cancel subscriptions you don't use. You could also look for ways to earn more money, such as taking on a side job or selling items you no longer need.

• Seek financial assistance

In South Africa, you have access to numerous programs and resources designed to assist you if you're facing challenges with your home loan payments. You can explore beneficial options such as loan modification or refinancing, which can potentially reduce your interest rate or monthly payments.

Additionally, reaching out to the National Credit Regulator, considering programs offered by the National Housing Finance Corporation and government, seeking professional debt counselling, and consulting non-profit organisations can provide valuable support. Taking proactive action early on maximises your opportunity to find a favourable solution.

• Consider selling your home

If you're unable to keep up with your home loan payments and other financial assistance options aren't available, selling your home may be the best option. While this can be a difficult decision, it may be better than facing repossession and the negative impact it can have on your credit score.

Before deciding to sell, it's important to consult with a real estate agent or financial advisor. They can help you determine the value of your home and whether it's possible to sell it for enough to pay off your home loan. If you're upside down on your home loan (meaning you owe more than your home is worth), you may need to consider a short sale or other options.

• Take action early

The key to avoiding repossession is to take action early. If you're struggling to make your home loan payments, don't wait until you've missed several payments before reaching out to your lender or seeking assistance. The sooner you act, the more options you'll have and the more likely you'll be able to find a solution that works for you.

When it comes to selling your home and preventing repossession, Knight Frank is your trusted partner. Our experienced team specialises in the real estate market, ensuring a smooth and efficient sales process. By choosing Knight Frank, you gain access to a wide network of potential buyers and our expertise in property valuation and marketing.