R1 Million Bond Repayments Now vs Nov 2021
Financial Stress Due To Bond Repayments
People often say to invest in property because it will “always go up in value”.
While this is somewhat debatable, what we have seen “go up” over the last 19 months is a massive increase in what bond holders are having to repay on their bonds.
Pre November 2021
During the global Covid 19 Pandemic interest rates dropped to some historic lows. This made taking on credit very enticing.
For those looking to own rather than rent a R1 million bond came in around R7 750 a month.
The opportunity to have your own place and do whatever you want in it seemed like a great deal and these repayments were similar to rental amounts in many areas.
With the previous repo rate hike (it stayed the dame this month) bond holders repaying a R1 Million home are now having to pay around R10 800.
This is because as the Repo Rate goes up consumers are having to pay more for the financing of their loans.
That has roughly been a massive increase of R3000 over the past 19 months.
‘a massive increase of R3000 over the past 19 months’
This increase has placed many who did not count on the rates going up quite so much under sever debt stress. Especially since their income has not gone up by as much during these 19 months.
And we know bonds take years and years to pay off with many being financed over 25 years or even 30 years.
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A massive danger exists for those who are struggling to repay their bonds and other debts.
‘If they miss one or more payments …the bank can take legal action to repossesses the home’
If they miss one or more payments they have already agreed that the bank can take legal action to repossesses the home and sell off on auction (in the finance contract).
They have also agreed that they will be liable for any debt left over after the sale. So, they could end up paying on and on for years for a home that they no longer own. And they would then still need to find a place to stay and pay for it.
If you are taking financial strain and have a bond why not reach out to a Debt Counsellor to discuss your options in dealing with your entire debt situation?