The national lockdown has more or less ended and so too have the short-term Covid-19 payment holidays offered by banks. Many homeowners, however, are still in dire straits financially and desperately need continued assistance.
Bank will have already started communicating with clients regarding their options, says Tim Akinnusi, founder and chief executive of Mortgage Market. “Look out for this and take the bank’s call. “If you have not been contacted by your bank and you took a payment holiday, it’s your responsibility to contact your bank now.”
He says homeowners’ option to catch up on the payment holidays will be an extension of the terms of their home loan by the necessary amount, to enable them to keep the same instalment. The benefit of this is that their accounts will be brought up to date as if the payment holiday never happened.
Those who are not in a position to pay these instalments must be proactive and call their banks to make payment arrangements that suit what they can afford. In some cases, the banks have other options available to struggling homeowners. We asked the four major banks what they are doing to assist customers during these difficult and unprecedented times.
FNB Praven Subbramoney, the bank’s chief executive of private lending, says like other FNB customers affected by the lockdown, the majority of property owners have been supported either by the FNB cash-flow relief solution or mortgage product relief solutions.
He says FNB is committed to working with willing customers to prevent the loss of their homes. “FNB will look to support customers further with additional extended relief options by trying to help qualifying customers unlock collateral – property equity and saving – to optimise their personal cash-flow position.”
The bank is also offering cashflow relief extensions to selected customers. Subbramoney says these customers might qualify for up to three months additional relief, taking the total amount of relief to six months. The bank is also evaluating applications to extend its Covid19 cash-flow relief for retail and commercial property customers on a case-by-case basis.
“In addition, commercial property customers may continue to receive support through the Covid-19 Loan Scheme. We are working together as the banking industry through the Banking Association SA, with the National Treasury and the SA Reserve Bank, to make constructive amendments to the scheme.”
Standard Bank
Standard Bank will continue to provide support to its clients, who are in financial distress, through a range of solutions and it urges customers to approach it should they feel they need assistance or support to alleviate or mitigate financial distress. “All our solutions will be assessed on a case-by-case basis, depending on the client’s requirements and situation,” says Steven Barker, who is head of lending products.
Standard Bank has also supported several private and government-driven initiatives, including the R200 billion SME Covid-19 Guaranteed Loan Scheme which was jointly created by the National Treasury, the Reserve Bank and commercial banks. This scheme offers new loans to assist existing customers with operational expenses and carries a 6-month repayment holiday. The bank has already received strong interest from customers.
“The bank is making disbursements to those who qualify and who meet its credit requirements.” Standard Bank Insurance also offered 25% cash-back relief on car insurance premiums from March 27 until the end of May.
Nedbank
Nedbank clients who opted for debt relief measures or payment holidays were able to go for up to three months without servicing the monthly bond payments, says Thozama Mochadibane, head of customer delight, Nedbank home loans.
However, due to the capitalisation of interest and other service fees the amount owing in arrears at the end of the payment holiday would be “quite substantial”. To alleviate this financial burden, she says Nedbank customers can choose between paying a onceoff instalment increase of 5% after 12 months or an annual instalment increase of 1% after 12 months. On a R1 million home loan, the first option will see them paying an extra R483 a month but repaying the loan five months sooner than the original loan term.
“In respect of option two, should the client be in a position 12 months after receiving debt relief to increase the instalment payment by 1% annually, they will pay less over the life of the loan and repay the loan off nine months sooner than the original loan term.” This restructure is not a result of Covid-19 but the standard method of managing clients’ arrears payments.
Absa
Absa has launched specific interventions to help its customers during the Covid-19 pandemic, says Geoff Lee, home loans managing executive. Its Payment Relief Programme, which was launched on March 3, gives qualifying customers the option to defer payments on credit products for a period of three months and has no turnover limits or income thresholds.
“Since the launch of the programme, more than 736 000 account holders have benefited from the relief, which amounts to more than R9 billion cash-flow relief.” While the programme provided cash-flow relief for an initial three months, Lee says the bank is constantly reviewing the situation around Covid-19 and its impact on our customers.
“To this end, we will be making an announcement on Absa’s offering in this regard in the near future.”
◆ If a customer had taken out insurance with Absa, the following additional relief measures will also have also been offered:
◆ Customers have been able to miss two months’ life insurance premiums without affecting their cover.
◆ Short-term insurance customers were able to get a 15% discount on their premiums for the months of May and June.