Should You Include Your Home Loan Under Debt Review?

Debt review, also known as debt counselling, is a tailored process aimed at helping individuals who are heavily indebted to manage and repay their debts in an affordable manner. This process effectively consolidates all your debts into a single, reduced monthly payment, providing a protective shield against adverse actions from creditors, such as repossession of assets or wage garnishment. The repayment plan is individually tailored, designed to fit the unique budget of each person involved.

When opting for debt review, it is mandatory to include all credit agreements in the process. This includes loans for significant assets like your home or vehicle if they are financed. You do not have to pay your home loan off in full before you can exit the process. If you have settled all your other debts in full and your home loan repayments are up to date, you can apply for a clearance certificate and exit the process.

The duration of a home loan generally surpasses that of unsecured debts, including credit cards, personal loans, store cards, and even vehicle finance. Therefore, it’s typical for your unsecured debts to be paid off significantly sooner than your home loan. When this happens, your home loan is released from the debt review process. Subsequently, your credit bureau status will be updated to F1. This change, along with the clearance certificate you receive for settling your unsecured debts, reinstates your eligibility to access new credit.

While the prospect of placing a substantial amount of debt under debt review might initially seem overwhelming, there are several benefits that you might not have considered. Debt review allows you to leverage your assets strategically to alleviate financial pressure and protect what matters most.

Protect Your Home Under Debt Review

1. Protection from Legal Action

By including your home loan in debt review, you gain legal protection against creditors’ actions. This means creditors cannot initiate legal proceedings, such as repossession or foreclosure, as long as you adhere to the agreed-upon reduced repayment plan.

2. One Fixed Lower Installment

Debt review allows for the consolidation of various debts, including your home loan, into a fixed single, more affordable monthly payment. This means your payments remain constant despite fluctuations in the repo rate. This restructuring eases the burden of multiple payments, providing financial breathing room to manage expenses more effectively.

3. Preservation of Assets

Contrary to popular belief, including your home loan in debt review doesn’t automatically put your property at risk. As long as you maintain regular payments as per the agreed-upon plan, you can retain ownership of your home while gradually settling your debts. As well as continue paying your home loan well after you have exited debt review as per normal.

4. Peace of Mind

One of the most significant benefits of including your home loan in debt review is the peace of mind it brings. Knowing that your finances are being managed proactively, and you have a structured plan in place to repay your debts, can alleviate stress and anxiety, allowing you to focus on rebuilding your financial stability. Moreover, with the assurance that home loans can be paid as per normal within as well as after the debt review framework, individuals can pursue a path to financial freedom with confidence and peace of mind.

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