How to handle a break-up with your bond

Every buyer goes through a 'honeymoon' period when their monthly bond repayment seems a small price to pay for the sheer pleasure of owning a home. But the romance can soon sour if that instalment becomes too big a burden.

One minute you're in heaven — oh, the joy of it all! — but then you're faced with unforeseen expenses: costly car repairs or the need for a new car, a job change with a salary cut, or any number of challenges that put strain on your monthly household budget. And soon that buyer's bliss becomes a burden.

And the problem is that the problem is not going to go away by itself, so the sooner you sort out your available options, the better.

The early warning signs that you're buckling under pressure include making your bond repayments later and later each month, cutting back on the repayment of other debts so you can afford the bond repayment, or perhaps even 'borrowing' from your credit card or overdraft to make up the shortfall on the instalment.

If you find yourself in this sort of situation, the first thing you need to do is work out how long your cash crunch is likely to last. An interest rate decrease may be on the way, or you may soon be due for a salary increase. Perhaps you'll be able to ease the situation quite quickly by cutting family spending, by taking a part-time second job to pay off your short-term debt, or even by getting a new, better paid full-time job.

The second step is to stay calm, even if it looks like you'll be in a bind for quite some time. Don't panic. Take charge and contact your lender about options to help lower your monthly home loan repayment. You may be able to extend the term of the loan, or cap it for a while, so that you only pay the interest until your circumstances improve. If you've owned your home for quite some time and have good equity, you may even be able to refinance the loan at a lower interest rate.

Thirdly — and this could require some brutal honesty on your part — you may need to own the fact that you really can't manage the bond repayments at this stage, and should rather sell your home, pay off your debts and begin all over again.

Remember, it's not the end of the world — we humans are infinitely resilient! — but you should seek professional help through a bank-assisted sale programme, which will help to get the property sold at the best price and in the shortest possible time. This decisive action should keep your credit record intact and allow you to keep control of your financial destiny.

Whatever you decide to do, don't stop paying those monthly instalments. It makes no sense to wait and see what happens. The last thing the bank wants to do is repossess your home, but once the letters of demand start pouring in, it will be difficult to convince anyone that you're taking your obligations seriously, or that you have a workable plan to get yourself back on your feet.

And if you let your home be repossessed, you'll lose all the lovely equity you've built up, and your credit record could be ruined for years. What's more, if the property is then sold at auction for less than what you owe the bank, you'll still be liable for the shortfall.

The honeymoon may be over, but your future as a homeowner certainly isn't. Be realistic about your financial circumstances, make use of all the help that's available, and you'll soon bounce back.