Tips to keep up with your bond repayments in difficult times

“Last week the repo rate went up again for the second time this year and for cash strapped consumers this could mean barely making it every month when it comes to repayments,” says Brian Katjaerua, Head of Home Loans at FNB Namibia. He adds that the home loan is, however, any person’s most important debt and asset and possibly also the biggest monthly debit order deduction. “Staying on top of home loans repayments should be a priori­ty, and this should also be the last debt that anyone considers not re-paying in crunch times.”
Katjaerua continues by saying that the important driver to always keep intact is that income must always be more than monthly expenses. “The only way in which to make this work is to increase your income or lower your expenses,” adds Katjaerua and gives a few tips for bank customers with a mortgage.

Be overly strict for a few months
Make the money you earn work for you by implementing strict measures to manage your expenses, especially home loan installments as a matter of priority. “Study your bank statement and look at each expense leaving your bank account,” suggests Katjaerua. “More than likely unnecessary expenses are coming off, whether it is pay TV, entertainment or even unnecessary banking fees, each dollar saved will help. There is not much point in having Pay TV or ordering pizza in if you don’t have a home in which to enjoy these luxuries. It is important to note that this isn’t forever, just until you are back in a comfortable space. Also make sure you understand what you use the cash withdrawals for each month, as this, more often than not, is the likely source of unnecessary and un­controlled spending.

Look at places to cut down
There are some necessary expenses that you can’t forgo. However, there are places to negotiate and cut down. “Insurance is one place that is open to negotiation, spend some time gathering quotes and renegotiating your insur­ance contracts,” suggests Katjaerua. Another place to cut down is services such as cell phone bills. “While having a cell­phone is considered a necessary expense, racking up huge data costs to surf the internet or chatting for hours to friends is not necessary,” says Katjaerua. You can also look at your water and electricity bill consumption. Just by being more vigilant you can save on these expenses. The well-known debate of “needs” versus “wants” should always guide your decisions whether or not to spend.

Temporarily reduce or push pause on other investments
You can push pause or temporarily reduce contributions to other savings accounts. “This is not a long term solution to solve your cash flow problems, but reducing your savings commitments for a few months may give you breathing space until you are back in a position to service your debts and continue investing and saving,” says Katjaerua. Make sure that as soon as you are in a position to, you reinstate all your investments and savings contributions.

Earn extra income
If you are really not getting on top of your ­expenses and you are ­exceeding your income consistently, you will need to look at other ways in which to earn extra income. “Again this is not a long term solu­tion, but can help relieve the ­immediate ­pressure until you are able to make your responsibilities again. “Consider working ­overtime to earn a bit more income, if you have the option,” says Katjaerua.
Other ways to earning a bit more cash could be to rent out an extra room for a few months.

Don’t stop paying
“Don’t be tempted to miss or stop paying all together,” says Katjaerua. “Even partial payments show good faith and interest will ­accumulate slower helping you to catch up.” However, partial payment isn’t a long term solution. If you are really struggling, speak to your bank.
Admitting you need help as soon as you realise that you are heading into financial difficulty will go a long way to protecting your home. “Your bank may enter into acceptable arrangements with you to ensure that you keep your home. Repossession is the last resort and a bank will assist you in every possible way to ensure that this doesn’t happen,” says ­Katjaerua.
“There are a number of solutions that the bank can offer to help you if you are having financial difficulties, however it is up to you to also pro-actively take steps to help yourself out of the position you have found yourself in – in the first place,” ­concludes ­Katjaerua.