Navigating bond cancellation can be complex, especially for first-time property sellers or those unfamiliar with the legal processes involved. In South Africa, cancelling a bond before or after the sale of property requires a comprehensive understanding of bond cancellation figures, how they are calculated, and what timelines to expect. In this guide by Jonker Vorster Attorneys, we’ll break down the essential steps, key considerations, and frequently asked questions about bond cancellation.
What Are Bond Cancellation Figures?
Bond cancellation figures represent the amount that remains unpaid on a home loan at the time the bond is terminated. These figures are crucial because they determine the total amount you’ll need to pay to settle your debt with the bank before the bond can be legally cancelled. Once the property is sold, the conveyancing attorney managing the sale will request these figures from the bank to confirm the outstanding balance.
Why Are Bond Cancellation Figures Important?
Bond cancellation figures ensure that sellers are aware of any remaining debt obligations before transferring ownership. Knowing the figures upfront helps avoid delays and unexpected expenses during the sale. It’s also a necessary step in finalising the legal transfer of property.
How Are Bond Cancellation Figures Calculated?
Bond cancellation figures are not simply the outstanding balance on your home loan. Banks consider additional factors, including interest, potential penalties, and administrative fees.
Here are some components that typically contribute to bond cancellation figures:
Outstanding Loan Balance: This is the amount you owe on your mortgage, excluding any additional fees.
Notice Period Interest: If the required three-month notice period is not provided, the bank may charge additional interest.
Early Settlement Penalties: Depending on your agreement, paying off the bond early may incur a penalty fee.
Administrative Fees: This covers the bank’s administrative cost for processing the bond cancellation.
Each lender may have slightly different terms, so it’s essential to consult with your bank and clarify how these figures are calculated. Working with an experienced attorney can also provide guidance on specific cancellation terms outlined in your bond agreement.
How Long Does It Take to Get Bond Cancellation Figures?
The time it takes to receive bond cancellation figures depends on the bank and the efficiency of your conveyancer. Generally, the process includes the following steps:
Requesting the Figures: The conveyancer submits a formal request to the bank.
Bank Processing Time: Banks typically take up to two weeks to issue the bond cancellation figures.
Confirming Payment Requirements: Once the figures are received, your conveyancer will confirm the payment requirements and schedule the bond cancellation.
If any details are missing or require verification, this process may take longer. Therefore, it's advisable to initiate the request as early as possible to avoid delays, particularly if you’re planning to sell the property soon.
Step-by-Step Bond Cancellation Process
Step 1: Notify the Bank of Your Intention to Cancel
In South Africa, banks require a three-month notice period to process bond cancellation requests. Notify your bank in writing about your intention to cancel the bond to avoid additional interest charges. This period allows the bank to calculate the figures and gives you time to prepare financially.
Step 2: Hire a Conveyancer
A conveyancing attorney will handle the legalities involved in the cancellation process, from requesting the bond cancellation figures to settling the debt. It’s essential to choose a qualified attorney with experience in property law to avoid unnecessary complications.
Step 3: Confirm Bond Cancellation Figures
Once the bank has processed your request, it will issue a bond cancellation figure statement. Review this document carefully, noting the outstanding balance, interest charges, and fees. Your conveyancer can help clarify any confusing details and confirm the total amount needed to settle the bond.
Step 4: Pay the Outstanding Balance
After confirming the bond cancellation figures, arrange for payment to settle the remaining debt. This payment usually takes place just before the transfer of the property, ensuring all legal requirements are fulfilled.
Step 5: Finalise the Bond Cancellation
Once the debt is cleared, the bank will issue a bond cancellation instruction, allowing your conveyancer to complete the cancellation process in the Deeds Office. This final step legally removes the bond from the title deed, making it possible to transfer ownership to the buyer.
Bond Cancellation Fees
In addition to the bond cancellation figures, sellers should be aware of additional fees involved in the cancellation process. These may include:
Conveyancer’s Fees: The conveyancing attorney will charge for their services, including the administrative work required to cancel the bond.
Deeds Office Fees: A fee is required to officially cancel the bond in the Deeds Office.
Bank Charges: Some banks may include a cancellation fee as part of the bond cancellation figures.
Each of these costs varies, depending on the complexity of the transaction and the bank’s policies, so it’s important to budget for these expenses when planning a property sale.
FAQs about Bond Cancellation
What Happens if I Don’t Give the Bank a Three-Month Notice?
Can I Negotiate the Early Settlement Penalty?
How Long Does the Entire Bond Cancellation Process Take?
Will Bond Cancellation Affect My Credit Score?
Conclusion
Cancelling a bond is a critical step in the property transfer process. With a solid understanding of how bond cancellation figures are calculated and what fees to expect, sellers can prepare financially and avoid delays. Consulting a trusted attorney, like Jonker Vorster Attorneys, can make a significant difference in navigating the legal aspects and ensuring a smooth, efficient transaction.
For those considering bond cancellation, being proactive about communication with your bank, conveyancer, and prospective buyers will save you both time and money. Whether you’re selling a property or simply paying off your bond early, this guide should serve as a resource to help you make informed decisions and ensure compliance with all requirements.
Contact us today or mail Hendre Vorster at hendre@jvattorneys.co.za.
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