Struggling Mortgage Payers Get Answers

February 12 - Many people were affected by the recent recession which we still find ourselves in, and while the best thing to do would be to hang onto property until the poor conditions pass, the sad fact of the matter is that some people simply cannot afford to pay their monthly premiums anymore.

So what do home owners who want to cancel their mortgage with their bank do?

Colin Brazendale, a debt counsellor advises homeowners who find themselves struggling. "You cannot just hand the keys back to the bank and walk away," he said. "You will be liable for the debt and interest until the house is sold to recover the outstanding mortgage."

Brazendale said that homeowners should first consult their banks to try and work out a plan before they cancel their mortgage.

All banks are keen to ensure that homeowners continue paying their mortgage and many are running programs that will help struggling South Africans rearrange their loans to make them more affordable on a monthly basis.

For those who do eventually decide that the only resort is to sell, banks also have assistance programs for this route as well.

Should the property not sell, the bank will either put it to auction or retain it until it is sold.

Homeowners should do all they can to ensure that the property is sold for more than what they owe the bank, otherwise they will be short and will be liable for the difference.

The property market, while showing signs of recovery, is still problematic and many properties are now worth less than their bond amounts.

"This option also means that you lose an investment and that you will have to pay rent on alternative accommodation," advises another debt counsellor.

Homeowners should therefore rule out all other options before asking the bank to step in, including renting out the house to cover the mortgage and moving into cheaper accommodation; selling the home themselves to get a better price or consulting with a debt counsellor to see if there anything they are overlooking.

2/12/2010 10:40:35 AM