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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