FINANCE
Want to cancel your bond?
Be aware of the heavy costs involved
The bank is required to assess the applicant’s
financial position one when the applicant applies for
a loan. If the financial situation changes, the bank is
not obliged to review the loan again. The bank may
well do this on its own accord and then withdraw
the loan, which it is entitled by law to do at any time.
Even if the bank does decided to take a sympathetic
line and withdraw the bond, if the original sale
contract has been signed and sealed and the previous
suspensive conditions were all met, the agent, the
conveyance and possibly even the seller will be in a
position to claim for their time, their costs and their
lost income.
F
airly regularly in the process of awarding
mortgage bonds for home purchases, the
banks will be faced with a situation in which,
for whatever reason (usually a serious change in the
applicant’s economic circumstances), the client will
want to cancel the bond granted to him by the bank.
The problem with this, is that it will end up costing
a fortune because it often means that you would
forfeit your deposit, the commission that would
have been made on the property and any wasted
conveyancer costs... all adding to a large whack of
cash that you can’t afford to lose.
The bond applicant may then often approach the
bank with a request to review the application and
decline the loan so that none of these costs will have
to be paid (many property sales contracts make the
sale dependent on the buyer receiving the bond).
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Residential Handbook 2014
The banks are likely of their own accord to review
granted loan applications if considerable time has
lapsed between the loan approval and the registration
bond.
Obviously, no bank wants to impose on a buyer a
bond on which he is likely to default and in general
they will therefore adopt a sympathetic attitude.
However the public has to realise that between
the time they sign the application and the bond is
awarded, it is absolutely essential not to enter into
any other credit or pay-out arrangements which will
adversely affect their financial situation.
All banks reserve the right to withdraw from the
bond prior to registration. They may be able to do
this, but they will never formally “decline” a bond
once it has been granted.
RESOURCES
Mike van Alphen, Rawson Property
www.reimag.co.za