How the Bond Cancellation Process Works

Are you selling your house or is your bond paid off? Here’s how the bond cancellation process works.

Selling your home or property is a significant milestone, but it can also bring about some confusion, especially when it comes to cancelling your bond. Understanding the bond cancellation process is important to ensure a smooth transition and avoid any unexpected costs or delays. Here’s a comprehensive guide to help you understand the process.

When you have settled your outstanding loan amount, you can also initiate the bond cancellation process. This involves a few key steps:

Submit your Notice of Intent to cancel.

Before you can cancel your bond, you need to provide your lender with a written notice of your intent to cancel, usually 90 days in advance. This notice period is essential to avoid any early termination penalties that might apply if you cancel the bond prematurely. If your bond term is nearing its end, this step may not be necessary.

Request cancellation figures.

Once your notice has been submitted, your conveyancer or cancellation attorney will request the cancellation figures from your lender. These figures include any remaining amounts you owe, along with interest accrued from the date the figures are provided until the bond is officially cancelled.

Settling any outstanding amounts.

If you are selling your property, any outstanding amounts will typically be deducted from the sale proceeds during the transfer process. If you are cancelling your bond without selling the property, you will need to settle these amounts directly.

Pay the Cancellation fees.

While lenders generally do not charge cancellation fees beyond early termination penalties, you will need to cover the attorney’s fees for handling the bond cancellation. These fees can vary but are generally around R6000, which is separate from the buyer’s transfer costs and solely the seller’s responsibility.

Tips for streamlining the process.

  • Notify your Lender early – As soon as you decide to sell your property, notify your lender to avoid early termination penalties and ensure a smoother process. This early notice can save you from unexpected costs and help in planning your next steps efficiently.
  • Include Protective Clauses in your Sales Contract – Consider including a clause in your sales contract that pauses registration until the 90-day notice period concludes. This clause protects you from incurring penalties if the sale and transfer occur swiftly.
  • Make sure you understand Expiration Dates – Be aware that your notice of intent to cancel may expire if your property does not sell quickly. Different lenders have varying policies on the validity of these notices, so confirm this with your lender to avoid having to restart the process.
  • Ensure Insurance Continuity – If your Homeowners’ Comprehensive (HOC) insurance is debited from your home loan account, make arrangements to transfer this debit order to a different account before your bond is cancelled. Failure to do so could cause your insurance cover to lapse, leaving you unprotected.

The costs associated with bond cancellation can vary based on the attorney handling the matter and any additional loans registered over the property. On average, the bond cancellation fee is approximately R6 000. When selling your property, you’ll also need to consider additional costs such as municipal rates and levies, estate agent commission, and various compliance certificates.

Cancelling a bond is an essential step in the home-selling process, but with the right information and preparation, it can be managed smoothly. Understanding the steps involved and seeking professional advice can help you avoid unnecessary fees and ensure a seamless transition.

If you have any questions about the bond cancellation process or need assistance with your property sale, my team and I are here to help. As experienced conveyancing attorneys, we can guide you through every step, ensuring a smooth and efficient transaction. Contact us today for expert advice and support in all your property-related matters.