Penalties on settling bond early?

D

Dill

Well-Known Member
Joined
May 6, 2012
Messages
340
Reaction score
93
I was looking to buy an apartment that is selling off plan. It's currently selling for R1.1m

If I was to sell the property after everything is fully built in the complex for more than I purchased and settled the balance with bank after 2 years of taking the bond, would I be charged a penalty for settling it early?
 
The_Ogre said:
No, you just need to give 90 days' notice
Click to expand...

Agreed. Currently in the same position, and it was my questions to the banks when doing the home loan applications. There's no penalties, but you must give 3 month notice for cancellation, otherwise there will be extra fees. Basically the same process if you moved home loan to another bank.
 
Praemon said:
Agreed. Currently in the same position, and it was my questions to the banks when doing the home loan applications. There's no penalties, but you must give 3 month notice for cancellation, otherwise there will be extra fees. Basically the same process if you moved home loan to another bank.
Click to expand...

Giving 90 days notice is effectively the same as a 3 month interest penalty. It amounts to the same thing.
 
Praemon said:
Agreed. Currently in the same position, and it was my questions to the banks when doing the home loan applications. There's no penalties, but you must give 3 month notice for cancellation, otherwise there will be extra fees. Basically the same process if you moved home loan to another bank.
Click to expand...
I read this on the OOBA website
"If your bond is relatively new, and you want to cancel it within the first two years of the loan agreement, you will also be liable for penalty interest of approximately 1% of the amount owing. This penalty will be applied once the house is sold and deducted from the proceeds of the sale."
www.ooba.co.za

Bond cancellation fees and how to avoid paying them

The bank is entitled to charge fees for the early cancellation of a bond. Providing 90-days written notice will help you avoid this penalty.
www.ooba.co.za www.ooba.co.za

I've been reading that a 1% penalty will be charged.

So just sell after 2 years of the bond?
 
Dill said:
I read this on the OOBA website
"If your bond is relatively new, and you want to cancel it within the first two years of the loan agreement, you will also be liable for penalty interest of approximately 1% of the amount owing. This penalty will be applied once the house is sold and deducted from the proceeds of the sale."
www.ooba.co.za

Bond cancellation fees and how to avoid paying them

The bank is entitled to charge fees for the early cancellation of a bond. Providing 90-days written notice will help you avoid this penalty.
www.ooba.co.za www.ooba.co.za

I've been reading that a 1% penalty will be charged.

So just sell after 2 years of the bond?
Click to expand...

I suspect this is bank dependant then. My bond agreement with Standard Bank didn't mention any early cancellation fee other than the 3 month notice, and nor did FNB's agreement.
 
Dill said:
I read this on the OOBA website
"If your bond is relatively new, and you want to cancel it within the first two years of the loan agreement, you will also be liable for penalty interest of approximately 1% of the amount owing. This penalty will be applied once the house is sold and deducted from the proceeds of the sale."
www.ooba.co.za

Bond cancellation fees and how to avoid paying them

The bank is entitled to charge fees for the early cancellation of a bond. Providing 90-days written notice will help you avoid this penalty.
www.ooba.co.za www.ooba.co.za

I've been reading that a 1% penalty will be charged.

So just sell after 2 years of the bond?
Click to expand...

So don’t you pay everything off and leave a R100 bucks. Will the penalty be R1 then?
 
deweyzeph said:
Giving 90 days notice is effectively the same as a 3 month interest penalty. It amounts to the same thing.
Click to expand...

The part nobody seems to understand. Knowing too much mathematics is a dangerous thing.

images
 
Why not keep the bond open if it is an access bond?
 
Dill said:
I read this on the OOBA website
"If your bond is relatively new, and you want to cancel it within the first two years of the loan agreement, you will also be liable for penalty interest of approximately 1% of the amount owing. This penalty will be applied once the house is sold and deducted from the proceeds of the sale."
www.ooba.co.za

Bond cancellation fees and how to avoid paying them

The bank is entitled to charge fees for the early cancellation of a bond. Providing 90-days written notice will help you avoid this penalty.
www.ooba.co.za www.ooba.co.za

I've been reading that a 1% penalty will be charged.

So just sell after 2 years of the bond?
Click to expand...
That is only true if you got the bond through an originator (like ooba) because the bank pays the originator a fee for sourcing the transaction and they are entitled to recoup that from you if you cancel the bond early. If you applied directly with the bank this would not be applicable.
 
Jehosefat said:
That is only true if you got the bond through an originator (like ooba) because the bank pays the originator a fee for sourcing the transaction and they are entitled to recoup that from you if you cancel the bond early. If you applied directly with the bank this would not be applicable.
Click to expand...
Is this 100% true? That's interesting, will definitely avoid using a bond originator if this is the case.
 
Dill said:
I was looking to buy an apartment that is selling off plan. It's currently selling for R1.1m

If I was to sell the property after everything is fully built in the complex for more than I purchased and settled the balance with bank after 2 years of taking the bond, would I be charged a penalty for settling it early?
Click to expand...

Here is another idea...

Why close the bond.... and just regear and buy more!

You can thank me later!
 
Jehosefat said:
That is only true if you got the bond through an originator (like ooba) because the bank pays the originator a fee for sourcing the transaction and they are entitled to recoup that from you if you cancel the bond early. If you applied directly with the bank this would not be applicable.
Click to expand...

I went through BetterBond and there's no early cancellation penalty in their terms, and nothing on the bank's side either. Can't say for Ooba, but I'd be surprised if there is something.

I think the wording is being read out of context though:

If your bond is relatively new, and you want to cancel it within the first two years of the loan agreement, you will also be liable for penalty interest of approximately 1% of the amount owing. This penalty will be applied once the house is sold and deducted from the proceeds of the sale.
Click to expand...

It talks about the penalty being on the amount owing and there being a sale of the house. ie. you sell the house within 2 years and still have money owing on the bond. If you pay up the bond first though (like the OP is intending), there won't be a penalty unless you cancel the bond without giving 3 months notice.

But unless the bond terms actually state an early penalty (none of the grant offers I received had one), then I'd imagine there isn't even one to worry about. All of them seem to have the 3 month notice period though.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X