HOW TO PREP YOUR BUDGET FOR THE APPROACHING HOLIDAY SEASON
The past three years have not been easy on many consumers' pockets, and with the year-end just single-digit weeks away, there is the possibility that the festive season may further impact tight budgets. Not accounting for forthcoming costs associated with multi-gift purchases for those who celebrate Christmas, and/or a holiday away from home, or even treats during a time when most are winding down a difficult year, can create further distress.
The end-of-year break is also, traditionally, a time of review and reflection. It's a time to consider what the past has taught you and how to move forward with your dreams and better meet your goals. Planning ahead should be an essential part of the review process, whether it's for the forthcoming holiday season's financial impacts or just prepping your personal budget to start the new year without regret.
That time starts right now, says Absa's Zain Khan, Leader Strat Comm & Stakeholder Relations, and Kefilwe Zelda Sekhonyana, National Manager Pre-Legal Collections.
Do not default on your home loan
Sekhonyana tackles one of the most difficult point of debates for many homeowners, who, when facing the end of year expenses, may make unwise choices that lead them to consider defaulting on their home loan.
"This is not a good idea," says Sekhonyana. "A home is the place where we raise our family, where we go to recover, heal, and restore ourselves when we feel tired or ill. It is a place where we make memories, and it enables us to create asset value in our financial portfolio for retirement and estate purposes. This means that our property is so much more than an account that we need to pay off; it is an investment that can keep on giving for generations to come. The home loan requires, therefore, a more sensitive approach than other short-term credit purchases, which is not to say those aren't important.
"Should a customer be faced with the unfortunate situation of not being able to meet home loan payments for a couple of months, or in the worst-case scenario, being unable to meet the home loan instalment commitment, it is vital to immediately engage with the Home Loans Collections team the moment they foresee financial difficulty," she says. "Time is of the essence; the sooner a customer advises us of their financial situation, the sooner we will be able to look at the different plans or options we have in place that will best assist the customer."
Absa's Collections Department presents, the programmes on offer to financially distressed customers based on the unique nature of a customer's financial circumstances. These comprise short- and long-term solutions.
"Short-term plans include allowing for home loan instalments to be reduced for six months and can, potentially, be extended depending on the customer's situation. Concessions can also be applied, which can reduce the monthly home loan instalment to as low as 25% of the Contractual Monthly Payments, but this is usually only in extreme cases and based on the customer's affordability.
"Long-term, there is a chance that the home loan could be restructured. This includes the bank allowing you to extend your home loan instalment for a longer term, say by 360 months, which will reduce the monthly instalments. This is called forbearance, the acceptability of which is primarily dependent on the customer meeting an affordability criteria and which is an individual assessment based on individual circumstances."
One of the greatest fears for home loan account holders who are in a terrifying position of losing their homes due to financial difficulties is that the bank will repossess their homes. However, Sekhonyana makes it clear that this is always the last resort and only if all other remediation efforts fail. "Primarily, we want our customers to hold onto their homes. We understand the emotional attachments and the need to be able to provide a roof over the heads of a family, which is why, if we are unable to resolve their financial distress with a credit solution, we will first appoint a dedicated team to assist the customer to see their property."
This bank-assisted sales programme is called HelpUSell and motivates the selling of the property for the highest possible offer. "It allows the customer to work together with the bank in the sale process, and should there be a shortfall post the sale, Absa is prepared to grant concessions or rebates to allow the customer to extricate themselves from the debt.
"The Bank will always do its best to support customers in troubled times. This assistance is dependent on our customers' willingness and receptiveness to engage and accept the alternative options by working with the bank to reach a mutually sustainable solution," says Sekhonyana.