CANCELLING YOUR HOME LOAN

Are you thinking of selling your home, do you have an existing home loan and are unsure of the process?

We’ve put together a step-by-step guide to make the process easier to follow.

The process takes an average of around three months from the date of sale, until the property is registered in the new owner’s name. There are however other considerations that may delay the process, such as waiting for a stipulated condition in a contract to be fulfilled, a deceased estate or an early settlement of the bond.

Please note that FNB is currently the only bank with no penalty fees.

 

Step 1 – Cancellation Notice:
You need to give your current bank 90 days’ notice if you intent to cancel your bond with them. This process usually fall’s under the appointed conveyancing attorneys duty and they will arrange directly with the bank.

However, if you wish to cancel your home loan before the 90 days period or before an official Offer to Purchase has been signed, you will be levied by the bank with an early termination charge.

Your bank can also give you more information with regards to renewing your notice, should your property not be sold by the time the 90 days expire. Remember each bank works differently.

 

Step 2  – Request the Cancellation Figures when the property is sold:
As soon as your house gets sold, a legal representative will be appointed to manage the transfer. A conveyancing attorney is required for this process as the bond cancellation must be registered at the Deeds Office, against the title deed of the property. The banks’ cancellation attorney will provide a settlement statement, with your cancellation figures.

 

Cancellation figures (Valid for a period of 90 days, the total figure will include):

  • Your outstanding loan balance on the date that this information is issued;
  • One month’s instalment which is a contingency amount;
  • Monthly Service Fees;
  • Home-owners Insurance Premiums – if applicable;
  • Bond Protection Premiums – if applicable;
  • Early Termination Charge;
  • Legal Fees – if applicable due to Legal Proceedings.

Interest will be calculated from the date that the figures are issued up until payment is received. Only once the cancellation figures are paid and the cancellation is registered at the Deeds Office, will your home loan officially be cancelled.

Additional costs vary according to your personal circumstances. In addition, the attorney who acts on your behalf charges a fee for the official home loan cancellation at the Deeds Office.

 

Step 3 – Cancellation refunds:
Any excess funds received after the cancellation has been registered in the Deeds Office, will be refunded to the client or attorney’s bank account.

Make a reminder that the cancellation attorney needs to send you your original Title deed. This is your proof of ownership of the property.

Written by: The Zest Group

 

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