Did You Know? - Property Sellers Are Liable For Bond Cancellation Fees
Thinking of selling your home?
You've probably got an existing bond that needs to be settled so remember that early settlement is likely to cost you a 90-day termination or bond penalty charge - if you give the Bank less than 90 days' notice. The National Credit Act allows banks to process this fee if a seller gives notice of the intent to cancel their bond before the end of the conventional 20-year loan period.
What most sellers however do not always realise, is that they are still liable for the attorney's bond cancellation fees.
The costs are worked out per bond registered over a property and not the value of the bond or the amount outstanding at the financial institution.
E.g. One bond cancellation = R 4 742,00 and three bond cancellations = R 5 969,00.
Herewith the table of costs for the attorney's bond cancellation fees:
|
BOND CANCELLATION FEES 2022 |
||||||||
|
# BC's |
FEE |
VAT (15%) |
P&PETTIES |
VAT (15%) |
D/O FEE |
ELEC INST. |
VAT (15%) |
TOTAL (R) |
|
1 |
2 800,00 |
420,00 |
600,00 |
90,00 |
142,00 |
600,00 |
90,00 |
4 742,00 |
|
2 |
3 210,00 |
481,50 |
600,00 |
90,00 |
284,00 |
600,00 |
90,00 |
5 355,50 |
|
3 |
3 620,00 |
543,00 |
600,00 |
90,00 |
426,00 |
600,00 |
90,00 |
5 969,00 |
|
4 |
4 030,00 |
604,50 |
600,00 |
90,00 |
568,00 |
600,00 |
90,00 |
6 582,50 |
|
5 |
4 440,00 |
666,00 |
600,00 |
90,00 |
710,00 |
600,00 |
90,00 |
7 196,00 |
|
6 |
4 850,00 |
727,50 |
600,00 |
90,00 |
852,00 |
600,00 |
90,00 |
7 809,50 |
|
7 |
5 260,00 |
789,00 |
600,00 |
90,00 |
994,00 |
600,00 |
90,00 |
8 423,00 |
|
8 |
5 670,00 |
850,50 |
600,00 |
90,00 |
1 136,00 |
600,00 |
90,00 |
9 036,50 |
|
9 |
6 080,00 |
912,00 |
600,00 |
90,00 |
1 278,00 |
600,00 |
90,00 |
9 650,00 |
|
10 |
6 490,00 |
973,50 |
600,00 |
90,00 |
1 420,00 |
600,00 |
90,00 |
10 263,50 |
Cancellation figures
Do not think that the 90 days' written notice means automatic cancellation of the bond at the end of that period. It merely represents your intention to sell your property and cancel the home loan, and it's best to do this before you put your home on the market. A new letter must be written to start the process again if the property does not sell within that time.
It is also important to know that the bond will only be cancelled after a conveyancer requests the final figures from the bank. That only happens after the property has been sold and the attorneys have received all documents required.
If the seller does not provide the required notice, the date the conveyancers request the final figures will be the one that marks the beginning of the notice period. The cancellation fee will then depend on the time taken to register transfer of the property.
Penalty Interest - If Bond Is Less Than 2 Years "Old"
If your bond is relatively new, and you want to cancel it within the first two years of the loan agreement, you will also be liable for penalty interest of approximately 1% of the amount owing. This penalty will be applied once the house is sold and deducted from the proceeds of the sale.
General
- The 90-day notice period may be waived by the bank if a new property is purchased and another bond is taken out with the same financial institution.
- Penalties are not applied for sequestration.
- Penalties are not applied for deceased estates.
- Where loans are cancelled within the 90-day notice period, pro-rata interest is charged on the remaining days.