Debt Consolidation: Help Me Stop Drowning

[MartyMarts]

Property value, in the event that you default and they need to sell the property.

Yip. They won't go past what they think it's worth.

 

[akescpt]

can u rent out a room or something? selling should be the last option. good luck.

 

[Ho3n3r]

Property value, in the event that you default and they need to sell the property.

Would they really value the house at R690k if they don't think I'll be able to sell it at that price again? Logic?

Yip. They won't go past what they think it's worth.

But it's not. They valued the house at R690k, and that's all I loaned.

 

[Ho3n3r]

Cool Let us know how it goes later today?

Thanks, I will indeed. The lady seemed very helpful on Saturday, and yesterday, and I told her I need to speak to only her and the homeloan department today - not a new agent in her place.

 

[MartyMarts]

Would they really value the house at R690k if they don't think I'll be able to sell it at that price again? Logic?

What is it worth now though? If you had to sell what would you list it at? Have you done any improvements to the property while you've been there. Banks seem to do estimate property valuations these days so if you feel it's worth more then they might be willing to send out someone to valuate it rather than just estimate against other similar properties in the area.

 

[Ho3n3r]

What is it worth now though? If you had to sell what would you list it at? Have you done any improvements to the property while you've been there. Banks seem to do estimate property valuations these days so if you feel it's worth more then they might be willing to send out someone to valuate it rather than just estimate against other similar properties in the area.

Well, the big things we've done is perk up the garden so that it looks neater, and we painted the inner house a normal color, as opposed to the bright orange it was before, which I'm convinced brought down the selling price quite a bit, especially as some people might be too lazy to paint it again.

But I can think of more things to do, I still need to remove a tree that's preventing a section of grass to grow, and make sure that the grass actually grows there.

But not much else, really. It's a pretty small place to begin with.

So, in short, I think it's definitely not worth less than I bought it for.

EDIT: The reason the garden looked like sh*t before, is because the previous owner rented the place out, and the renters didn't give a damn.

 

[ice_cubes]

if the house has an outside building, you can always rent it out for now

 

[TJ99]

Thanks man. I did realise that as well, and that's why I bought. Renting is just throwing money in the water, as opposed to a house, which is an investment. Looks like we're the only 2 in this thread that realises it. And renting wouldn't have been that much cheaper, so I would almost be in the same situation.

It is already over 30 years though.

I just don't understand why the bank can't extend my loan by about 50k and make more money out of it, whilst totally resolving my situation. Last night I made some more calculations, and turns out I would actually be saving about R1.5k by being allowed to do this.

So I don't get why I should **** myself by selling and renting again, which would be a much worse situation long-term, just to resolve my short term woes, which could just as easily be resolved by the bank just actually trying to help me a bit better.

Anyhow, I have an appointment with the bank today, and I am determined to make them listen to me. I cannot accept that they are just flat out saying no to more money. It doesn't make business sense.

Thanks vampire.

No one suggested that you rent, they said buy something cheaper instead.

Also: A house you live in is usually NOT an investment. It's an asset, sure but it's only an investment if you make money on it. You do get something out of it when selling, so you don't lose all your money as with renting, but living in it yourself and paying only the minimum amount each month means that you will most probably not make a profit when selling

 

[MartyMarts]

Well, the big things we've done is perk up the garden so that it looks neater, and we painted the inner house a normal color, as opposed to the bright orange it was before, which I'm convinced brought down the selling price quite a bit, especially as some people might be too lazy to paint it again.

But I can think of more things to do, I still need to remove a tree that's preventing a section of grass to grow, and make sure that the grass actually grows there.

But not much else, really. It's a pretty small place to begin with.

So, in short, I think it's definitely not worth less than I bought it for.

EDIT: The reason the garden looked like sh*t before, is because the previous owner rented the place out, and the renters didn't give a damn.

Yeah then maybe let the bank know you've done some "improvements" over time so the place should be worth more now. Maybe they'll agree to send someone out to evaluate it. Who knows - maybe they'll extend your bond to R750k or something.

We've improved our place drastically over the years and definitely will get a lot more for it now but when I think of all the money we've poured into it over that same period, I almost feel like we'd come out even today

 

[Ho3n3r]

No one suggested that you rent, they said buy something cheaper instead.

Also: A house you live in is usually NOT an investment. It's an asset, sure but it's only an investment if you make money on it. You do get something out of it when selling, so you don't lose all your money as with renting, but living in it yourself and paying only the minimum amount each month means that you will most probably not make a profit when selling

OK. Let's go for asset then.

And again, anything cheaper we saw was not worth buying.

It does not have an external building either, the place itself is quite small already.

 

[Maverick Jester]

Would they really value the house at R690k if they don't think I'll be able to sell it at that price again? Logic?

Your bond may have been R690k, but you ended up paying a deposit. Why was this?

Either way- the need to consider the cost of selling the house on the open market at a reduced amount (and the subsequent administration fees), and lessening the shortfall to as little as possible.

 

[TheMightyQuinn]

It does sound like you had really bad luck re. your wife losing her job. Most of us are a dual income family. If my wife had to lose her job today, we would also be in the k@k.

Have you requested what the banks call a "Bond Vacation" or a "Bond Holiday" where you do not pay your bond for up to 6 months so you can get "ahead"? You may qualify.

 

[ISP cash cow]

Your bond may have been R690k, but you ended up paying a deposit. Why was this?

Either way- the need to consider the cost of selling the house on the open market at a reduced amount (and the subsequent administration fees), and lessening the shortfall to as little as possible.

It's very difficult to get 100% bonds now day so thats why he probably put the deposit down.

a couple of questions

How long have you been in the house for?
When you look at your electricity bill at what value have the estimated your property worth?
What interest rate are you paying on the bond?

 

[borga]

Buying may be better than renting, but that is not often the case.

http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/

The New York times has a nice calculator with variables that you can change to see the outcome of Buy vs rent.
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html


If there is a possibility that you would need to more within a few years then renting might be cheaper and it provides you with more flexibility.

 

[Greg C]

I work for a bank(will not be named) In the business/commercial side

Your issue is as everyone attacks you not at all unheard of
You approached the bank and a grant was given according to the NCA. Normal rules now apply on net which can be feal;t with client experiencing it being more and more difficult to achieve lending

To make a mention, people often moan as in this forum there were comments of the expected 30% personal loans percentage. Any and every bank will charge exorbatant prices on loans that are unsecuritised under 100 000 and have no guarentee if that debt will be paid back. Simply put if your "aquaintance" you kind of knew said he/she wanted money from you what would you do (logically) you would charge them alot and you would keep tight tabs on if they pay you. Simply that is how we see it as well if it is unsecured lending because if something should happen we takle the hit and have to claim back legally on the estate.

Lets no digress lets talk about your issue currently.
Depending on the duration of your bond your bank may have a flexi reserve meaning they give you a facility at your mortgage interest rate against the equity in the property (again simple jargon left out) Bond cost X, minus the outstanding=y this equals the equity. If your bond is very new within 2 years this facility is no accesible to you, but if it is you can utilise it to repay the loan off at Absa.

I am afraid selling is an option but an unfortunate one but rather sell before the bank begins its credit process for 3 month/late payment process.

Your most direct priority is to attempt to save costs and can only at this stage be done via interest rate differences.
Thus further options
1) use a credit card to pay off the term loan to reduce the interest payments say to 15% rather than 21%
Once 2 years use the bond facility to pay the term loan off at bond rate
2) whilst everyone is extremely scared of them the debt counseling services can help-How do they work?
They will take the risk, consolidate your debt into a facility, and effectively pay them back through their channels or you can do it yourself through re registration but again costly so cash flow is an issue.

It is unfortunate to state th;at I cannot think of any other way out other than
1) part time job on the side and weekends
2)Regul;ar phone call to bank with you NOTING the time and date, individual and details of conversation when you phone the bank should payments become late etc
3) attempt like the rest of us to get a high paying job for minimal effort( joke intended) and use a rule of thumb going forward

In the bank we have stress testing... heard of it? well itl do wonders for you
You takle 3 scenarios
1 best case scenario
1 worst case scenario
and the average

at this stage average would be for you the payments that are offered on the quote from the bond and loan at the interest rate of say prime +2

Worst is if interest rates change to prime +4
Best case, interest rates change and you get prime +1

And see how the payments change, change them rapidly as it will give you a better idea of the room on your belt you should have. NOT WHAT THE BANK calls affordable(thats a ratio) but whats comfortable realistically for you.

Hope this helped Greg

I seriously need help now.

Basically, I have a home loan of R621k (Standard), and a personal loan of R74k (ABSA), which covered the deposit, and a bit more. The house price was R690k.

Now, before I started paying this, with the interest rate and the levy cost at the time, my salary was pretty much on the limit, I mean I knew I could afford it, and we have to knuckle down for 5 years, but it will get better with time.

However, then the interest went up twice in the last year, electricity went up quite a bit, and our levies went up R400 in the last 3 months, making my expendable income about R1.1k less than it was a year ago.

Thus, I went to Standard Bank and asked them if they could pay off the R61.7k remaining on the ABSA loan, and add it to my homeloan, as it would make business sense to them as well, as they would get more money from me in terms of interest, and I would pay less, and the only loser would be ABSA, which is really fine by me.

But, according to them, they can only up the bond's worth up to the original R621k, and pay out the amount that I've paid over to them in the last 15 months, which is about 12k after interest.

Surely there's another way, without re-paying bond registration etc.? How can I make this easier on both me and the wife? We seriously can't cut anywhere anymore - we don't even have DStv, never have, never will. Next things that will need to be cut, is insurance and medical aid, which is not ideal.

I really hope someone with experience in such a situation can give me something I can look at.

Thanks in advance.

 

[Drifter]

http://www.blog.standardbank.com/blog/2011/08/our-golden-rule-we-ll-do-all-we-can-keep-you-your-home

From the blog above. This is complete and utter BS. In no way will they give you a moratorium.

We will assist you by:
• Arranging a moratorium on payments,. in other words we will suspend your loan for a set period, helping you recover from a temporary financial setback.

 

[Maverick Jester]

It's very difficult to get 100% bonds now day so thats why he probably put the deposit down.

True, but they gave him a 30 year repayment period. While most will assume it's to do with the overall interest paid being greater, it is also used to improve affordability criteria.

 

[Ho3n3r]

True, but they gave him a 30 year repayment period. While most will assume it's to do with the overall interest paid being greater, it is also used to improve affordability criteria.

They did initially give 20 years, but I thought better of it to extend it, since the extra money per month I had with this arrangement, would be a nice buffer, and that I would pay in any extra money I had left after the month was over, into this account anyway, so it was more flexible.

But now with a single income, and everything going up rapidly, it's getting tight.

@Greg thanks for the advice. So basically I have no options at the moment. Good to know, and bad at the same time.

 

[Maverick Jester]

They did initially give 20 years, but I thought better of it to extend it, since the extra money per month I had with this arrangement, would be a nice buffer, and that I would pay in any extra money I had left after the month was over, into this account anyway, so it was more flexible.

But now with a single income, and everything going up rapidly, it's getting tight.

Yeah, that's a big hit on you losing that additional income. And with it being already on a 30 year repayment period, you'd be hard-pressed to have them do more on this.

 

[Ho3n3r]

Yeah, that's a big hit on you losing that additional income. And with it being already on a 30 year repayment period, you'd be hard-pressed to have them do more on this.

Indeed. And that's why my logic says that they can extend the home loan to say R682k - still under the home's value - then I can pay off 100% of my personal loan, saving me about R1.5k, gaining them extra interest etc., and saving me from drowning, and nobody gets hurt.

But clearly this is an impossibility.