Too pricey to stay: When keeping your house hurts your pockets

Home is where the heart is, so your house should be where you’re most peaceful – but what happens when your place of refuge is the reason you can’t sleep at night?

South Africa’s high interest rates and record-high inflation have left many homeowners struggling to keep up with mortgage repayments.

Rising living costs and stagnant salaries have forced many South Africans to down-scale in attempts to survive the inflationary tide.

While letting go may sound like a simple decision, it’s not as easy as it seems.

Speaking to The Citizen, SA Home Loans Chief Operating Officer Zakheni Dlamini said it’s important for homeowners to carefully explore their options.

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‘Don’t ignore phone calls’

If you find yourself trapped in debt and lagging with repayments, Dlamini advised engaging your lender rather than ignoring them.

Truth is no one likes receiving phone calls from debt collectors. While putting your phone on silent may ensure some short-term peace of mind, it could also guarantee a long-term credit headache, earning you a spot on the credit bureau.

“Don’t ignore phone calls,” Dlamini said, advising homeowners in arrears to rather engage their lenders to explore possible solutions.

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Better some, than none

High interest rates have resulted in increased instalments, making it difficult for most homeowners to afford their monthly repayments.

“It’s better to pay a portion of what you were able to pay than nothing at all,” Dlamini said.

SA Home Loans 2024 Outlook predicts a slow recovery in the property market rather than a bounce back, alongside a cautious return of consumer confidence.

Dlamini explained that borrowers who continued making payments towards their home loan stood a better chance to recover when interest rates stabilise, than those who have entirely stopped servicing their loans.

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Deciding when to let go

For many people, a house is more than just bricks and mortar – it’s a home, which means there’s often a sentimental value attached.

Holding onto the memories may make it difficult to let go, even when it makes financial sense to part with your precious property.

If you’re at a crossroads and torn between drowning in debt to keep your home versus selling it for your financial freedom, Dlamini advised consulting your lender to find out what your options are – so you can make an informed decision.

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Don’t wait until it’s too late

Although the crippling fear of losing your home can be emotionally draining, it’s important to stay level-headed when it comes to your finances.

If push comes to shove and you’re forced to pack up, it’s advisable to ensure it’s on your own terms.

“Deciding to sell is better than having your home repossessed or sold on auction,” Dlamini said, explaining that homes sold on auction tend to be sold for a lot less than they are worth.

This means the amount made from an auction sale might not be enough to cover your entire home loan – leaving you homeless, with a bad credit record.

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