Sell Your White River Property - Help with Bond Cancellation Fees

Category Seller Advice

Sell Your White River Property - Help with Bond Cancellation Fees

You are excited. The buyer signed the Offer to Purchase agreement, enabling you to sell your White River property at a market related price and in record time. However, your excitement is short lived as you soon realise bond cancellation fees must be paid.

If you want to avoid having to pay bond cancellation fees, start by giving 90 days' written notice of your intention to settle the bond when you sell your White River property. Keep in mind that the notice is to inform the lending institution of your intention to settle and not of the bond cancellation 90 days from submitting the notice.

Early termination of the bond comes with penalties though in some instances, penalties do not apply. The bond cancellation only takes place after the final figures have been requested from the lending institution.

The bank is within its right to ask a 90-day termination fee if the debtor cancels the home bond before the end of the loan period. If you want to cancel a bond within 24 months from the start of the loan period, you can be held accountable for a penalty interest on the amount you owe. This interest is set at 1% of the outstanding amount and is applied once your house has been sold. The penalty is deducted from the amount you receive for the sale of your White River property.

When to give 90 days' notice of intention to cancel the bond

Do so when you put your house up for sale. It must be a written notice. Unfortunately, should your house not sell within the notice period you will need to write a new letter to the effect. The bond cancellation can only take place once the bank has released the cancellation figures and all the necessary documents have been received.

If you fail to give the 90 days' notice then the notice period starts once the conveyancing attorney requests the final bond cancellation figures. The fee payable then depends on the time it takes to register property transfer.

Important exclusions

If you buy a new property and register a bond for such from the same bank as where your existing bond must be cancelled, then the bank may waive the notice period. Penalties are not applicable to decease and sequestrated estates.

If the loan is cancelled with in the 90 days' notice period, the bank can charge pro-rata interest on the remaining period.

The various banks have different periods of validity. The notice period validity for Standard Bank equals 90 days, whereas FNB has it at 6 months, Nedbank at one year and ABSA at 180 days.

If you for instance, register a new bond at Standard Bank within six months from the old bond (as relevant to the White River property sold), then Standard Bank may decide to refund the notice interest that they have charged. The refund is made towards your new home loan. Ask bond originators regarding applicable fees.

If you sell your White River property and give 90 days' notice of the intention to cancel the bond, but the house sells within 30 days from giving notice, and the transfer takes place within 60 days from notice then the penalty is payable on 30 days.  It is thus important to give notice the moment your house goes on the market as to minimise the cancellation fees payable.

Avoid costly mistakes in selling and buying. Work with your realtor to ensure you give the 90 days' notice via email, fax or registered letter to save on costs. Make use of our experienced realtors to help you sell your White River property.

Disclaimer - Information is relevant at date of publishing (March 2019). The article is for general information purposes only and should not be seen as legal, realty or financial advice.

Author: Isebell Gauche

Submitted 04 Mar 19 / Views 76