Why sellers need to be financially fit

Financial fitness is often stressed for buyers as they need to be able to show a clean credit record and affordability for bond requirements - however, financial fitness for sellers is equally as important as they too need a clean credit record for future purchases.

In tough economic times, rising living expenses along with rising interest rates could easily result in homeowners falling behind on accounts that will negatively impact their credit records, if these homeowners live in sectional titles, late levy payments affect the entire complex as it puts pressure on the body corporate finances. 

Why financial health is important for home sellers

When it comes time to sell their properties, owners will be looking to purchase another property and therefore they will need to have a good credit score in order to qualify for finance. 

Sellers wanting the best price on their property will need to ensure that they aren't behind on their property rates, taxes, and levies as the outstanding amounts will be deducted from the proceeds of the property sale.  Added to this, is the probable interest that will have to be paid on the outstanding amounts - leaving the seller even more out of pocket.  

It is always best to contact the relevant parties and discuss a payment structure or payment plan instead of just leaving it to accumulate. If outstanding municipal and levy accounts are left to accumulate, sellers can end up in a situation where the amount achieved on the sale of the property doesn’t cover the outstanding municipal, levy, and bond amounts.

In this case, a seller would have to sign an acknowledgment of debt with the financial institution that holds their bond and instead of walking away with some profit from the sale, will end up walking away still owing money on an asset they no longer own. This situation also negatively influences the seller’s chances of obtaining finance again in the future, whether for a car, property, or any kind of personal loan.

Want to be financially fit in 2022?

• Keep a close eye on your budget and live within your means
• If you see that you are going to run into financial difficulties discuss your options with the relevant parties and make a plan before things get out of hand
• Read our finance fit blog post and how to set up a budget