Real Estate Investor Dec/Jan 2022 December/January 2022 | Page 60

Leonard Kondowe, National Admin Hub Manager for Rawson Finance, walks us through the steps to follow, and shares his tips on minimising costs and penalties along the way.

1

Submit your Notice
of Intent to Cancel Unless your bond has reached the end of its term( normally 20 or 30 years), you’ re going to need to provide at least 90 days’ written notice of your intent to cancel. Closing your bond before the end of your notice period could incur penalty fees.( These are normally waived if the property is part of a deceased estate or has been sequestrated, or if you’ re taking out a new home loan with the same institution.)
“ To avoid early termination penalties, it’ s always best to give notice to your lender as soon as you put your home on the market. You can cover your bases even more thoroughly by including a clause in your sales contract that pauses registration – which triggers bond termination – until the conclusion of your 90-day notice period. That way, if you sell quickly and the transfer goes faster than normal, you won’ t end up having to foot an unexpected bill,” says Kondowe.
Kondowe warns that your notice of intention to cancel may expire if your property fails to sell quickly. In this case, you’ ll need to resubmit and start the process all over again.
He further says“ expiration dates vary by institution, some expire immediately at the end of their 90-day period, while others remain valid for as long as 6 months.”
Good to know: Bonds cancelled very early, typically within a year or two of purchase – could be subject to an additional 1 % penalty on the outstanding bond amount. If you absolutely have to sell this early in your ownership period, Kondowe suggests asking your bond originator to negotiate this fee with your lender if at all possible.

2

Request Cancellation Figures
Providing notice of intent to cancel a bond doesn’ t actually trigger the cancellation process. This only happens when your conveyancer( or cancellation attorney) is instructed to request your cancellation figures. This can happen at a time of your choosing if you’ re closing your loan account of your own accord, or as soon as your property sells if it’ s on the market.

3

Settle any
Outstanding Amounts Your lender will provide cancellation( or settlement) figures to your conveyancer. These show exactly how much you’ ll need to pay to settle your remaining debt. If you are cancelling your bond without selling your property, you’ ll need to pay this out of your pocket. If you are selling, this will be paid automatically from the
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