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Your lockdown questions answered

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Q: I want to apply for a home loan but have had my salary temporarily reduced due to Covid-19. Must I quote my usual full salary when applying or my temporarily reduced income?

A: Customers’ income, current debt commitments and monthly household expenses are all considered to accurately determine an applicant’s affordability and, ultimately, their ability to take on additional debt. This principle does not change as a result of Covid-19, although we expect that the income of some customers will be affected, which will impact on their affordability. To this end, and in line with the National Credit Act, Absa considers a customer’s latest/current income. Even if the reduced income is temporary, the new/current income provides an accurate indication of an applicant’s current commitments and affordability. While we acknowledge the severe social and financial impact of the pandemic, as a bank, we feel it would be irresponsible to make decisions or adjustments to affordability based on unknown future earnings. – Geoff Lee, managing executive at Absa Home Loans

Q: Would it be better for me to wait for my salary to return to normal before applying for a home loan?

A: Any major investment, such as the purchase of a home, warrants careful research before you take the leap. Generally, if a customer knows their reduced salary is temporary, and likely to return to normal, we would recommend delaying the purchase, if possible. Once you’ve done your homework, you can take the next step from an informed position. – Geoff Lee, managing executive at Absa Home Loans


Q: If I communicate my financial distress to my bank will they repossess my home?

A: Repossession is not the first step banks take after being informed that clients are struggling to keep up with their bond repayments. There are a few ways they can help homeowners, such as rescheduling debt, offering some advice on the right steps to take or renegotiating the term of the loan from 20 years to 30 years. Once the homeowner tells the lender about their financial situation, the bank will be able to offer solutions. If the situation has got to the point where the homeowner can no longer handle it by themselves they can use a professional debt counsellor to provide guidance. A debt counsellor will assist the homeowner in reviewing their finances and submitting a proposed repayment plan to the relevant creditors. – Adrian Goslett, chief executive of Re/Max of Southern Africa

Q: If I get to the point where my home does need to be repossessed or sold, do I have to hand it over to the bank to sell?

A: Homeowners can opt to consult with a real estate company which specialises in the sale of distressed properties. Banks are working with agencies to sell distressed properties at market-related prices. If the homeowner would like to keep their credit record intact, the most effective method of doing so is selling the property and recovering from the financial crisis. In certain cases where the homeowner has built up enough equity, they may be able to cover not only their remaining bond but also some other debts as well. Essentially, this option could provide the homeowner with an opportunity to start again with a clean slate. – Adrian Goslett, chief executive of Re/ Max of Southern Africa

Q: I would like to list my home for sale online. What information do I need to include to make my listing stand out?

A: The future will see increased competition between online listings and buyers will be more discerning when browsing through these, so be sure to include: Accurate, dimensioned floor plans Provide additional, more detailed photos, with close attention to details like kitchen appliances, flooring materials, borehole systems and so forth. Spec manuals High-quality walk-through video footage of all areas, from the street to the corner of the back yard, including garages and storage spaces. Sectional title and estate homes should include more information about rules and regulations; committee members’ names; levies; design guidelines and what extensions and alterations are permitted and future plans. – Steve Thomas, secure estate specialist for Lew Geffen Sotheby’s International Realty

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