As a homeowner, there are several reasons why you may need to cancel your mortgage bond or home loan. In this article, we will briefly look at the reasons why you may be cancelling a mortgage bond, as well as the steps that you need to take to successfully cancel your bond.
The Steps to Cancel a Mortgage Bond
Before beginning the process of cancelling your bond it is recommended that you seek professional legal advice from a conveyancing attorney who may be able to help you determine the best course of action as well as provide you with assistance that is in line with legal requirements. In South Africa it is legally required that the cancellation process be executed by a conveyancing attorney.
The main reasons for cancelling a bond are as follows:
- The home loan has been paid in full
- The property has been sold
The bond cancellation process requires the involvement of a few different parties. To cancel a mortgage bond, the following parties are involved:
- The owner of the property
- The bank holding the bond
- A bond cancelation attorney
- Transferring attorney
- The deeds office
Step 1: Submitting a Bond Cancellation Notice
If you are planning to cancel your mortgage bond, the first thing that you need to do is notify your bank, in writing, that you are planning to terminate your loan.
The majority of financial institutions in South Africa have a 90 day written notice period. Your bank has the right to charge an early cancellation penalty fee, as per the guidelines in the National Credit Act. You may be required to pay a penalty fee if you are terminating your bond early.
It is best to avoid unnecessary penalties by taking note of when your payment term ends.
Step 2: Obtaining Bond Cancellation Figures
If you are selling your property the transferring attorneys attending to the sale transaction will request your bond cancellation figures from the applicable Bank/creditor institution. The Bank/creditor institution will instruct an attorney on their cancellation panel to proceed with the necessary cancellation and the bond cancellation attorney will then provide the transferring attorney with the cancellation figures to enable them to issue the appropriate guarantees which are necessary to pay up the bond.
Should you just want to pay your outstanding bond and not sell your property you need to contact your bank directly, who will instruct an attorney on their cancellation panel to proceed with the necessary cancellation and the bond cancellation attorney will contact you directly.
Cancellation figures include the following:
- 90 days interest
- Month end balance before the cancellation figures
- The next 6 months home and credit life insurance premiums
- Penalty fees and legal expenses
Step 3: Payment of Bond Cancellation Fees
The cancellation penalty fees mentioned are included in the cancelation figures issued, however if you wait out the required 90 days the bond cancelation attorneys will apply for new figures after the 90 days have lapsed and new figures will be issued that exclude the penalty amount.
Penalties may also be waived if the same bank is used to take out a bond on a new property.
If you are not selling your property and only paying up your outstanding money owed on your bond, the bank will provide you with your original title deed once the bond has been formally cancelled in the Deeds office and the original title deed received back from the Deeds office.
Please remember whether you sell your property or even when you don’t owe any money on the bond which is being cancelled, there are always Bond Attorney fees payable when a bond is being cancelled. This fee includes the services rendered by the bond cancellation attorneys, as well as the cancellation in the Deeds office.
Alan Levy Attorneys: Conveyancing Attorneys in Johannesburg
South African legislation stipulates that conveyancing and cancelling a mortgage bond must be completed by a conveyancing attorney. Alan Levy Attorneys provide outstanding legal assistance for matters relating to conveyancing and bond cancellation.
This article is not intended as legal advice. Its purpose is to offer a basic understanding of South African law in relation to conveyancing and cancelling a mortgage bond. The content herein should in no way replace professional legal advice. Should you require assistance in this regard, you may Contact Alan Levy Attorneys and a member of our exceptional conveyancing team will be in touch to arrange further consultation.