Are you battling to break even as well as pay your monthly bond instalment? It is better to act sooner rather than later. Being in a position where you can no longer afford the monthly repayments on your bond is a terrible fate. Nobody wants to default on their bond, but sometimes it happens that people simply can’t afford to keep up the payments.

With the interest rate back at a pre-pandemic high, soaring inflation, and the rising cost of living, people’s personal finances are taking the strain. It’s a situation laden with fear, anxiety, and even embarrassment, but acting swiftly is key to dealing with distressed property and mitigating the impact of the situation. Distressed is the term used to refer to a property where the homeowner can no longer afford the bond repayment and has consistently missed payments – the property is then “distressed”.

What you don’t want to do is wait idly until the bank takes legal action. The moment you realise you are going to default on your bond repayment, you need to notify the bank and make contact with a property advisor to get the property on the market as soon as possible.

Simply put, you want to sell the property as quickly as possible to recover costs and settle with the bank before they take the legal steps that put the foreclosure process into motion. Working with a property advisor will ensure that the property is priced right for the market, which helps for a faster sale and may in turn help to minimise losses.

In cases where there is equity in the bond, selling quickly means there is a chance of covering both the outstanding bond and other debt with the proceeds from the sale.

The most responsible thing to do in a situation like this is to act as soon as possible. It is generally understood that if the bondholder is more than two months in arrears it is unlikely that they will be able to recover and pay the outstanding debt, which is why the legal process of repossessing the property is typically started after month two of non-payment.

In a stressful situation like this, it is far better to sell of your own accord than be forced to do so. A property advisor will help you sell the property at as close to its market value as possible and can draw on their network of attorneys and professional advisors to negotiate a more favourable deal for you where possible.

Even the bank wants to find a workable solution for recovering the loan and they may consider extending the loan period – if you act swiftly and opt for full transparency. Depending on individual circumstances, the banks may even be prepared to refinance the debt that remains after the sale of the property, over an extended period, without blacklisting you.

The best advice? Act as soon as you sense you may be in trouble, and then work swiftly and take a ‘cut your losses’ approach and do whatever it takes to avoid being blacklisted.