What do you do if you can’t keep up with your bond repayments and you’re facing having your home repossessed? You could sell, but what if you owe the bank R1 000 000 but you can’t get your asking price and the best you can get is R800 000?
Selling voluntarily isn’t an easy decision to make as it is, but it’s better than getting involved in legal wrangles. FNB has come up with a programme called Quick Sell that acknowledges that, although property values have dropped, outstanding loan balances are still at levels from previous years. A Quick Sell concession can offer a seller some relief. Here’s how.
Let’s take the example of the R1 000 000 property. If it sells for R800 000, the shortfall to the bank is R200 000. In terms of the Quick Sell concession, 15% is deducted from the outstanding loan balance of R1 000 000 – that’s R150 000. The concession is then subtracted from the R200 000 shortfall, which means the amount that needs to be repaid to the bank after the sale is only R50 000.
If you were paying R9 300 a month (calculated at prime), you will now pay a monthly instalment of R830 interest-free over five years, say.
FNB allows you to repay the loan interest-free over a period of up to 10 years, if you wish, which means having some money in your pocket and, just as importantly, avoiding legal action.
You won’t lose your home or be listed with the credit bureau – you will have a chance to make a private sale with the banks’ assistance. Your property will be marketed for up to 90 days, at a minimum of 80% of current market valuation, and the seller will need to pay 5,5% commission (that excludes VAT, of course). In this time, though, if you’re able to continue paying your home loan, you can do so.
If you compare the cost of a Quick Sale with a sheriff’s auction, it’s a no-brainer. With Quick Sell, if you owe R720 000 on your bond and sell for R510 000, and get the concession on the shortfall of R282 877, your new shortfall will be R172 312 (bearing in mind that this also takes into account agent’s commission, rates and taxes, legal fees, levies, cancellation fees and so on). Your interest-free monthly repayment over 60 months will be R2 871,87.
If you owe R720 000 and the property is sold on auction and you get R342 000, your shortfall will be R407 100 (after deducting cancellation costs, legal fees and three months’ interest). If you have to repay the loan over 60 months, at 9,50% prime, your monthly repayment will be R8 549,86.
Interestingly, buyers should note the advantages for them, too – FNB offers up to 100% bonds on all Quick Sell properties and they can receive a 50% discount off both transfer costs and registration fees (if handled by an FNB-appointed attorney).
In effect, FNB is trying to make the whole process of selling less painful for those who are, in essence, forced to give up their homes. It’s not going to make you feel a whole lot better, but at least you know this much – it could actually be a lot worse. Quick Sale is definitely worth bearing in mind.