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There are several elements that influence your financial health. Understanding and proactively managing them will go a long way towards securing your financial future. We have provided some useful information on relevant issues to help you manage your finances.
Sound financial management starts with gaining a good understanding of your household income and expenses.
Household income is the combined incomes of everyone sharing a household. This often means a couple who are both “income contributors”, but can include any household member who contributes. Household income includes every form of income such as salaries, wages, rental income, retirement income, investment gains, and child support, amongst others.
Household expenses refer to living expenses such as rentals, mortgage payments, utility bills, groceries, and others. These expenses can be categorised in various ways.
These expenses may be either “fixed” or “variable”. Fixed expenses are expenses that are generally the same each month, usually contractual in nature and cannot easily be changed. Mortgage, health insurance, life insurance, car insurance, homeowner’s insurance education fees are examples of fixed expenses. Variable expenses are those where the amount is not constant and varies from month to month. Examples of variable expenses include groceries, fuel costs, utility bills and entertainment. Although many variable expenses are essential and unavoidable, individuals generally have more control over these types of expenses and the flexibility to reduce them if necessary.
Budgeting your expenses
A way to effectively manage your household’s income and expenses is to create an itemised budget. Although there are many approaches to creating a budget, a good place to start is to keep a record of your income and expenditure over the last few months and then to calculate a reasonable monthly average. With this information at hand, you can prioritise your expenditure, making sure you are not living beyond your means, and focusing on the payments that are essential. This will make it easier to know what expenses you could cut back on.
A credit score is an indicator to lenders of a prospective client’s credit worthiness. In general, the higher the credit score, the better the perceived credit risk and the more likely it is that lenders will extend credit at favourable terms. Conversely, if a poor credit score is calculated, a credit application may be declined, or credit may be extended at higher interest rates and at less favourable terms and conditions.
Maintaining a good credit record may provide easier access to credit. It is important not to become financially overextended, so financial commitments must be carefully planned and credit agreements entered into only if necessary.
How to maintain a good credit score:
You can contact a credit bureau to access your credit record, the information is usually provided once a year for free or at a minimum cost.
For most people, purchasing a home represents the single biggest investment, and is usually financed through a home loan. Although most homeowners would like to pay off their home loan in the shortest time possible, it is common for it to take a number of years. Until then, unforeseen circumstances such as death, disability, or retrenchment may impact on the ability to meet the home loan repayments in the event of the death of one of the applicants. Without proper insurance protection, a real risk then exists that the home loan will go into default with little prospect of recovery.
We therefore encourage our clients to have sufficient life cover in place to protect family against these untimely events. To ensure that you select the cover that is right for you, financial planning advice should be sought from a FAIS accredited financial planner.
The SA Home Loans Bond Protection Plan is also available.
Congratulations! The birth of a new baby is always a special time for your family. With the new baby come added responsibilities and expenses that will require careful financial planning. This planning however already starts with your maternity leave and important issues to consider at this time include:
Depending on the outcome of this assessment, you may need to approach your credit providers to discuss whether options are available to rearrange your payments during your maternity leave. A proactive approach will signal to your creditors that you actively take ownership of your financial situation, which in turn may give them confidence to enter into repayment arrangements with you.
If you anticipate that you will require assistance during your maternity leave, please contact us on 086 111 3414.
Retirement is a significant milestone that should be a time when you enjoy the fruits of a productive life. Yet, for many people retirement can also mean financial uncertainty; frequently retirement income cannot keep up with the demands of a rising cost of living; financial obligations such as home loans, vehicle finance and other credit obligations may place further strain on an already stressed financial situation.
Irrespective of your current situation, it is strongly advised that you discuss your financial needs with a qualified financial planner.
If you are experiencing financial difficulty with meeting your SA Home Loans bond repayment, please contact us on 086 111 3414 to discuss your options.
Divorce is a stressful life experience. Yet, even at this challenging time the best outcome is when both parties can agree on a settlement agreement without the need for lengthy and expensive legal action. Not only is the process of getting divorced quicker and easier, entering into a settlement agreement also allows each party to start the new phase of their lives sooner.
If both parties jointly entered into a home loan agreement with SA Home Loans, the settlement agreement and subsequent divorce order does not impact your financial obligations to us. SA Home Loans is not a party to the agreement and both parties will therefore remain jointly and severally liable for the outstanding balance.
In the event that the settlement agreement awards full ownership of the property to one party, effect must be given to that order by cancelling and registering a new bond. If this new mortgage loan application is with SA Home Loans, it will remain subject to our normal credit criteria. Conveyancing costs apply to the transfer subsequent to a divorce order and to any related bond registration which is required.
To understand our requirements, or to give effect to the divorce order, please contact us on 086 111 3414.
Becoming unemployed is an event which requires important financial decisions to be made. Loss of income may make it difficult for you to maintain loan repayments or meet your other financial obligations. Unemployment can therefore have serious long-term implications on your financial wellbeing, so you should approach your credit providers to discuss your current situation.
In order to make an informed decision, you should consider the following questions:
At SA Home Loans we will carefully consider all the information that you provide to us with the aim of finding a workable solution that is in the best interest of all parties. Solutions may include payment plans, or assistance with the selling of your property if this is an option that you are considering. The assistance that we may provide is tailored to each client’s unique situation and will remain subject to our terms and conditions.
If you require more information regarding the options that are available to you, please contact us on 086 111 3414.
Few people are ever ready for the death of a spouse. Not only is it an emotional time but there are also important financial matters that must be dealt with. We believe that being informed about what must be done can help relieve some of the stress and uncertainty experienced during this difficult time.
Collect all relevant documentation
Ensure that important documents are stored in a safe, known and readily accessible location. A list of such documents could include:
Furthermore, to start the process of winding up the estate a death certificate must be obtained.
The benefit of life cover
An important factor that influences the administration of a deceased estate is whether the home loan was secured with life cover or not.
If valid life cover is in place at the time of death, the proceeds of the policy may fully or partially settle the outstanding home loan balance. If no life cover is in place the balance on the bond as at date of death becomes due and payable. If the surviving spouse or remaining bond holders are unable to settle the full balance owing, then one of the following events options will typically occur:
At SA Home Loans we understand how difficult a time this is for the family and surviving borrowers. We encourage you to contact us on 086 188 8777 so that we can discuss the options that are available to you.
Insolvency refers to a status of diminished legal capacity imposed by the courts on persons, companies, close corporations or trusts that are unable to service their debt obligations and where total liabilities exceed total available assets.
The aim of the insolvency process is mainly to protect the estate’s creditors. This is achieved by realising all the assets of the insolvent estate and using the proceeds to contribute towards payment of all or part of the outstanding liabilities. From a SA Home Loans perspective the outcome of the insolvency process is that the property in question must be sold.
Obligations in the event of insolvency
In the event of insolvency, the obligations and responsibilities of borrowers and sureties are influenced by their legal relationship with the insolvent party:
Bondholders married in Community of Property
By virtue of the fact that the spouses are married in Community of Property both spouses will be declared insolvent, and a Trustee will then deal with a joint insolvent estate.
Bondholders married in terms of an Ante Nuptial Contract
SA Home Loans will determine if there is a solvent bond holder associated with the bond. If so, then it is the responsibility of the solvent bond holder to ensure that the bond repayments remain up to date. If the bond is not up to date, SA Home Loans can proceed with legal action.
A Company or CC is liquidated
With regards to a SA Home Loans mortgage bond, sureties may also be held liable for any shortfall which is outstanding after the sale of the property. Furthermore, in the interim, whilst the liquidation process is underway, home loan repayments must still be met. If the bond falls into arrears, SA Home Loans may proceed with legal action against the sureties to cure the default.
If your loan was granted on the basis of a “salary deduction”, the monthly home loan instalment will be paid by your employer directly to SA Home Loans via salary stop order. It is important to note that the responsibility lies with you to ensure that the stop order is implemented. Failure to do so may result in your bond – reflecting in arrears, with negative consequences for your credit record.
The following steps will guide you in implementing your salary stop order.
It is important to note that fixed quarterly rate reviews may result in a change to your instalment. Should your instalment increase, you will be required to amend your salary stop order accordingly; failure to amend the salary stop order may result in your home loan/s falling into arrears.
Apart from the above, please note that any other changes to your instalment will also require an amendment to the salary stop order with your employer. In the event of you no longer receiving a salary stop order please contact us on 0861 888 777.
It is always best to maintain your home loan instalment payments to your lender. Not only does it ensure that you maintain a healthy credit score, it also means that you repay the capital portion of your loan on time. By doing this, you avoid additional interest that accrues on the higher outstanding loan balance. However, you may find yourself in a position where you are struggling to honour your financial obligations and you are now in default with your home loan instalments.
We understand that our clients do not usually willingly default on their commitment to us. A default on your home loan will have a negative impact on your credit score which will likely limit the credit that will be available to you in the future. We know that your home loan is your most important investment and provides security to you and your family, so we believe that an honest and open discussion around the reasons for any default will go a long way towards finding a solution that is to our mutual benefit.
Each client’s situation is different and a “one size fits all” approach will not result in the best outcome. It is for this reason that each client is assessed individually before a decision is made about whether an arrangement is the appropriate solution for their needs. Because of this approach, we have developed a structured information gathering process that will assist us in identifying possible solutions to collect the arrears and remedy defaults, and will provide you with a clearer understanding of your financial situation. Should you have any questions about the settlement of your arrears or about entering into an arrangement please contact us on 086 111 3414.
If a client is unable to meet their repayment obligations under the home loan agreement, and there is no suitable arrangement in place, we reserve our right to commence legal action. A Section 129 notice is the start of this process.
What does receiving a Section 129 Notice mean?
A Section 129 notice is formal notification in accordance with the National Credit Act No. 34 of 2005 ("NCA"), in which you are made aware of your rights under the NCA. The purpose of the Section 129 notification is therefore to inform you of the following:
Although we will make every effort to assist you in rehabilitating your home loan, there may come a time that we need to initiate foreclosure proceedings to recover the outstanding amounts which are due to us.
In the event that the foreclosure process has commenced, a number of steps will follow, such as:
Letter of demand/written demand
A letter of demand serves to inform the debtor and / or surety of an amount that is being claimed within a stipulated period. The Section 129 notice can also serve this purpose.
Summons
In the pleading stage a summons setting out the details of the claim is served on the borrower(s) under the home loan. Once a summons is served the borrower(s) have 10 Court days in which to defend the action. Court days are all calendar days excluding weekends and public holidays. If the action is not defended, then the mortgage in favour of whom the bond has been passed is entitled to request default judgment.
Default judgment
It is a judgment in favour of a Plaintiff when the Defendant has not responded to a summons or has failed to appear before a court of law.
More information about default judgment and Writ (Warrant of Execution Against Property)
A default judgment will severely injure your financial future and should be avoided at all costs. Some of the consequences of a default judgment are:
If the debtor does not honour a Court judgment, the creditor may issue a warrant / writ of execution in terms whereof the Sheriff of the Court may attach and sell as much of the debtor’s property as necessary to satisfy the judgment.
Sale in execution
A sale in execution is a public auction of a bonded property by the Sheriff of the Court. A sale in execution is usually the last step that is taken when clients are unable to service the home loan repayments; the home loan is in arrears, and all other efforts at rehabilitating the loan have failed. Properties sold in this manner must be advertised in the Government Gazette and two local newspapers.
If the property is sold at auction, the borrower(s) will remain liable for the payment of any shortfall and legal costs, including the costs to sell the property at the sale in execution – this shortfall is the difference between what the property is sold for and what is owed on the bond plus interest and costs incurred.
Alternatives to foreclosure
As emphasised throughout, we strongly advise our clients to proactively manage their finances and in particular their home loan instalment commitments. It is also important that you pay your rates and utility bills on time and continue to maintain your property so that the value does not decrease. Legal action is the last resort, as it and is costly for all parties. In addition to the arrangement options discussed previously, if it is in the interests of a financially distressed client to sell his or her property, then this is a process which SA Home Loans will try to assist with.
It is generally better to sell a property privately than for it to be sold at a sale in execution as there will be fewer litigation costs and the price is typically higher with a private sale than a sale in execution.
“Sell Assist”
This is a programme where SA Home Loans will assist you to market the property through our network of estate agents. The agents charge reduced commissions ensuring that you receive the maximum amount for your property. You retain control of the sales process and will have to accept or reject any offers that are received.
If it was not possible to rehabilitate the loan, the outcome may be that the property is sold at a sheriff’s auction or sold privately or repossessed. A shortfall will arise if the proceeds of the sale are not sufficient to fully repay the outstanding balance on the home loan. At this point, we would seek to agree on a payment arrangement so that legal proceedings to recover the shortfall can be avoided.
Debt counselling is a process established by the National Credit Regulator (NCR) that consumers can use if they are no longer able to manage their debt obligations.
The credit records of consumers that apply for debt review are updated to reflect this status and, while it remains active, access to further credit will not be possible.
The debt review process starts with a debt counsellor assessing whether you are over indebted. If you are found to be over indebted, the debt counsellor will propose a restructuring of your debt and will submit the proposal to your creditors. However, loans where legal proceedings have already been initiated at the time of applying for debt counselling are excluded from the debt review process.
Although debt counselling can help you regain control over your financial situation, it should be considered as a short-term option. As soon your financial health has improved you may wish to consider whether it is an appropriate time to exit the debt review process.
Terms and conditions apply to all products. The availability of lending products is subject to our credit policy as amended from time to time.