BANK PENALTIES AND CANCELLATION FEES
This is an area of much misunderstsnding for banking clients as the concept is not fully grasped. Unlike every other credit provider that will give you a discount for early settlement, your bank will penalise you for early settlement of your bond. We suppose their logic is that seeing as they are not going to make a fortune out of your bond interest as they originally intended, they will punish you for this by charging you a fee on early settlement.
There are two fees involved :
1) A penalty for early cancellation (normally time constrained)
2) A cancellation fee
Below is a summary of the major bank positions :
ABSA:
Penalty is charged if the bond is cancelled within 2 years.
The penalty amount is approximately 1% of the outstanding balance.
The waivers for cancellation fees will be considered for the following reasons:
When a client has given 90 days written notice and it has been recorded.
When a client is re-financing a new property via ABSA after the sale of existing property.
When client is compelled to sell due to financial difficulty or to avoid legal action by collections( this excludes investors & speculators)
FNB:
Penalty is charged if the bond is cancelled within 3 years.
The waivers for cancellation fees will be considered for the following reasons:
When a client has given 90 days written notice and it has been recorded.
When a client is re-financing a new property via FNB after the sale of existing property.
Three months interest, which will be calculated by the bank, is paid as a cancellation fee
NEDBANK:
Penalty is charged if the bond is cancelled within 3 years.
The waivers for cancellation fees will be considered for the following reasons:
When a client has given 90 days written notice and it has been recorded or the client can pay finance charges.
When a client is re-financing a new property via NEDBANK after the sale of existing property.
Deceased Estates
Sequestered Estates
STANDARD:
Penalty is charged if the bond is cancelled within 3 years, a minimum period of 90 days must lapse from date of registration before a further 90 days notice can be given.
The bank reserves the right to charge interest if this criteria is not met.
The waivers for cancellation fees will be considered for the following reasons:
When a client has given 90 days written notice and it has been recorded.
When a client is re-financing a new property via STANDARD BANK after the sale of existing property.
IMPORTANT
Cancellation fees can be avoided at all major banks if 90 days notice is given of the sellers intent to cancel their bond.
NB: When client’s give notice, they must get a stamped copy of the cancellation letter from the branch, to prove that notice has been given.
Most conveyancing attorneys will give notice to the bank once the buyers guarantees are in place. This however, depending on time frames, might be a little late which means you as the seller will still pay fees.
We recommend that clients give notice to the bank immediately on signing a mandate with us. You can download a copy of a standard cancellation letter here.
Disclaimer: Please note that this information may change from time to time. This info was relevant at time of posting to website, therefore PROPERTY NETWORK can not be held liable for any incorrect figures. They will be updated from time to time but Sellers are advised to check their banks current policy when putting their home on the market.
Back to Costs of Buying
Go to Once off Costs
Go to Monthly Costs
Visit the Finance Advice Centre for
all your finance answers
For details on the various costs involved in buying a property go Here
Go to the Buyer Section for all your buyer answers
Remember to look through our Step by Step Buyer Guide and also visit our Blog for other helpful information
For details on the various costs involved in buying a property go Here
Go to the Buyer Section for all your buyer answers
Remember to look through our Step by Step Buyer Guide and also visit our Blog for other helpful information
BE A REAL FRIEND
SHARE THIS WITH SOMEONE
