Bond Cancellation Fees: What They Are and How to Avoid Them

Selling your home is a significant milestone, but amidst the excitement, it's crucial to be aware of potential costs that can arise, like bond cancellation fees. At Celsa Property Group, we believe in empowering our clients with knowledge to make informed decisions.​

Understanding Bond Cancellation Fees

When you decide to sell your property and settle your home loan, your bank may charge a bond cancellation fee. This fee is essentially a penalty for early termination of your bond agreement. However, with proper planning, it's possible to minimize or even avoid this cost.

The 90-Day Notice Rule

Most South African banks require a 90-day written notice of your intention to cancel your bond. Failing to provide this notice can result in a penalty fee, typically equivalent to up to three months' interest on your outstanding bond balance.​

For example, if your outstanding bond amount is R1,000,000 and your interest rate is 8.25%, the early termination fee could be approximately R20,625. However, if you provide the required 90-day notice, this fee can be avoided entirely.​

Timing Is Everything

It's advisable to submit your bond cancellation notice before listing your property for sale. This proactive approach ensures that the 90-day period elapses by the time the property is sold and transferred, thereby avoiding the penalty fee.​

Keep in mind that the bond will only be officially canceled once a conveyancer requests the final figures from the bank, which typically occurs after a sale agreement is in place.​

Exceptions to the Rule

There are certain circumstances where the bond cancellation fee may be waived:​

• Deceased Estates: If the property is sold as part of a deceased estate.
• Sequestration: If the property owner has been declared insolvent.
• New Bond with Same Bank: If you purchase a new property and take out another bond with the same financial institution.

​Final Thoughts

Navigating the intricacies of bond cancellation can be daunting, but with the right guidance, it doesn't have to be. At Celsa Property Group, we're committed to providing our clients with comprehensive support throughout their property journey.​

If you’re considering selling your home and want to ensure a smooth process, reach out to our experienced team. We're here to assist you every step of the way.​