You’ve signed your transfer and bond documents, the Transfer Attorneys have successfully registered the property in your name, and the Bond Attorneys have registered a bond over the property in favour of Bank X.
So, what options do you have from here onwards?
Following a bond-financed property transaction, homeowners typically have three primary options:
· Settle the loan amount advanced to you by Bank X
· Sell the property to a new purchaser
· Switch your bond from Bank X to another bank
Let us explore these three options in more detail.
Understanding the Difference Between Loan Amount vs Bond Amount
Before we begin, it is important to distinguish between the loan amount and the bond amount.
· The loan amount is the total sum lent to you (the Borrower) by the bank (Lender). It is repaid over the period of the mortgage loan agreement with interest.
· The bond amount is the amount for which the mortgage bond is registered over the property as security in favour of the Bank. This serves as protection for the Bank in the event of non-compliance with the terms of the loan agreement. The bond amount can be equal to or higher than the loan amount.
1. Settling the loan
Settling the outstanding amount is ideal if you want to pay off the loan and release the property from the Bank’s security. This usually means repaying the outstanding loan amount plus interest.
A helpful tip: settlement of the bond does not automatically cancel the bond at the Deeds Office. The Bank must first issue a formal instruction to the Bond Cancellation Attorneys to attend to the cancellation of the bond on their behalf.
2. Selling your property
This option mirrors the process that you followed when you purchased the property except this time, you are the Seller. Before the transaction may proceed, you will need to notify the Bank of your intention to cancel the bond. The Bank appoints Bond
Cancellation Attorneys and issue them written instructions along with the cancellation figures, provided you still have an outstanding loan amount. If the Purchaser is registering a mortgage bond over the property, instructed Bond Attorneys will act on behalf of the Purchaser’s Bank. If the Purchaser is financing the transaction with cash, the Bond Attorney’s involvement is unnecessary.
An advantage: You as the Seller have the right to nominate your own Transfer Attorneys.
3. Switching Banks
Switching Banks involves moving your home loan from one bank to another, usually to take advantage of a lower interest rate or better lending terms. This process will involve Bond Cancellation Attorneys for Bank X and Bond Attorneys for Bank Y. The existing bond in favour of Bank X is cancelled, and a new bond is registered in favour of Bank Y.
Conclusion
Whether you choose to settle your loan, sell your property, or switch your bond to another bank, understanding the implications of each option is key to making informed decisions that aligns with your financial goals. By being familiar with the processes and terminology involved, navigating your mortgage bond journey can be done at ease.
VDT Attorneys Inc. is well equipped to assist with the abovementioned processes. Feel free to contact our office should you require assistance.
Written by: Lesedi Digoro
Supervised by: Thabang Ditshego
