Owning your home outright is a dream for many, signifying financial freedom and stability. But before you celebrate that final bond payment, there's the often-overlooked hurdle of cancelling the mortgage bond itself. This process can be very complicated with hidden costs and important deadlines to navigate. 

Whether you're selling your property or simply reaching the end of your loan term, cancelling your bond requires careful planning. We aim to be your guiding light, shedding clarity on the key considerations involved in mortgage bond cancellation. 

So, if you're ready to untie the final knot on your mortgage and claim your property as entirely your own, keep reading!

What to know about mortgage bond cancellation 

Notice of cancellation
To initiate the cancellation process, you'll need to submit a formal written notice of intent to your lender. The standard notice period is typically 90 days, though exceptions may apply. For instance, you might be exempt from late-cancellation penalties if the property is part of a deceased estate or if you're simply switching to a new bond from the same lender.

Request cancellation figures
Upon notification of the lender regarding your intention to discharge the mortgage, it is advisable to engage the services of a conveyancing attorney. The attorney can then formally request a statement of account from the bank. This statement will detail the total sum required to settle your outstanding loan obligation, encompassing the following components:

• Principal balance remaining

• Accrued interest charges

• Any applicable fees or associated costs
  

Settling outstanding amounts
Upon receipt of the cancellation confirmation and final figures, all outstanding loan amounts will need to be settled. In the case of a property sale, these amounts are typically paid from the sale proceeds. It is important to note that interest will continue to accrue on the remaining balance until the loan is officially discharged.

Cancellation fees and insurance
Be aware that termination of the transaction may incur cancellation fees. These fees typically cover essential processes at the Deeds Office and administrative costs associated with the conveyancing process. Your conveyancer will handle these fees on your behalf and provide a detailed breakdown.

To ensure uninterrupted insurance coverage, it's crucial to arrange for the transfer of any premiums currently deducted from your home loan account to a separate account. Your conveyancer can assist you with this process.

Bond cancellation certificate
Following the complete satisfaction of all financial obligations, the Issuer will provide a Bond Discharge Certificate. This document confirms the full release of the security interest on the property.

Registration of cancellation
To finalise the property ownership transfer, the cancellation of any existing bonds must be registered with the Deeds Office. This critical step is typically undertaken by your conveyancing attorney, ensuring a smooth and accurate update to the property's title deed.

Additional considerations
Early cancellation penalty
Early termination fees associated with mortgage bonds in South Africa should be carefully reviewed within your loan agreement. These penalties may be applicable if the bond is cancelled before the end of a stipulated term.

By following the outlined steps and considering the potential financial repercussions, you can ensure a streamlined and efficient mortgage bond cancellation process.

Considering ending your mortgage? Du Plooy Inc. can help
Big decision, and a lot of factors to consider. But hopefully, this blog post has equipped you with the knowledge you need to approach the situation with confidence.

Remember, ending a bond can be a complex process, and it's always wise to consult with a financial professional before making any final decisions. Here at Du Plooy Inc. , our team of experts has extensive experience in helping South Africans navigate the ins and outs of their mortgages. We can help you analyse your specific situation, understand the potential costs and benefits of ending your bond early, and guide you through the process every step of the way.

Don't hesitate to Contact Du Plooy Inc. today. We will assist you to ensure you're making the best decision for your future.