Sometimes canceling a bond is an inevitable part of homeownership, but you’re not alone if you do not know what that process entails. Read through this article to know the steps on how to cancel a home loan without penalties.
How do I cancel my bank home loan?
Ensure you cancel your bank house loan in a timely manner. You must cancel your loan application by writing to the bank where you applied. Here’s a detailed breakdown of the steps involved in the procedure.
Step 1: Submit a notice of cancellation
You must give at least 90 days written notice of your desire to cancel your bond unless it has reached the end of its term (usually 20 or 30 years). There may be certain penalties if you close your bond before the notification period is through.
They usually waive these fees if the property is part of a deceased estate or has been sequestrated. Or if you’re taking out a new home loan with the same lender.
To avoid early termination costs, it’s usually a good idea to notify your lender as soon as you put your house on the market.
You can go even farther by including a clause in your sales contract that bans registration. And thus bond cancellation, until your 90-day notice period has expired. You won’t be startled with a fee if you sell quickly and the transfer takes longer than expected.
Institutions have different expiration dates. Some are valid for only 90 days and then expire, while others are valid for up to six months.
- Good to know: Bonds that are canceled within a year or two of purchase may be subject to an additional 1% penalty on the outstanding bond value. If you really must sell now, work out a deal with your lender through your bond originator.
Step 2: Request cancellation figures
When you send notice of your intention to cancel a bond, the process does not begin. This happens when your conveyancer (or cancellation attorney) is instructed to get your cancellation figures. If you’re closing your loan account on your own, you can do so whenever you choose or when your property sells if it’s for sale.
Step 3: Settle any outstanding amounts
Your lender will offer your conveyancer with cancellation (or settlement) statistics. These numbers show how much money you’ll need to pay off the rest of your debt. If you’re canceling your bond without selling your home, you’ll have to pay this out of pocket. If you’re selling, they will remove this from your sale proceeds automatically throughout the transfer process.
Keep in mind that from the time the settlement numbers are offered until they make the payment and the bond is finally ended, lenders charge interest on your outstanding balance.
Note: If your Home Owners’ Comprehensive (HOC) insurance is deducted from your home loan account, you must shift the debit order to a new account before they cancel your bond. If you don’t, your insurance coverage may lapse, leaving you in a difficult situation if something goes wrong.
Step 4: Pay cancellation fees
Lenders rarely charge bond cancellation fees, except for (unavoidable) penalties for early termination. You will be accountable for paying the cancellation attorney for their services. Even if they paid your bail fully. They may include these costs in the settlement amount granted by your lender if they employed a cancellation attorney on your behalf.
It’s important to keep in mind that this payment isn’t included in the buyer’s transfer fees. Bond cancellation fees are solely for the seller’s or bondholder’s benefit.
Read also: How To Get A Home Loan Or Mortgage In Ghana
Can I cancel an approved home loan?
Is it possible to cancel a mortgage loan that has already been approved? Before they actually disburse the money, the applicant has the option to reject the loan offer.
What happens when you cancel a mortgage?
Credit checks and appraisal fees, for example, are frequently refundable. For example, application processing and rate lock-in fees are usually non-refundable. They may charge you a fee if you cancel a mortgage application.
How much are bond cancellation fees?
If you want to cancel a new loan within the first two years of the agreement. Therefore, you’ll have to pay penalty interest of around 1% of the existing total. Then they will charge and deduct the penalty from the sale proceeds after they sell the house.
Will canceling a home loan hurt my credit?
No, ending a loan has no negative impact on your credit rating. The explanation for this is simple: your lender wouldn’t have to report anything to the credit bureaus if you cancel a loan application.
Can I cancel a home loan after signing?
Yes. For certain types of mortgages, you may change your mind after signing the mortgage closing paperwork. You may end most non-purchase money mortgages, often known as the right to rescission. The examples of non-purchase money mortgages are refinances and home equity loans.
How do I know if I can qualify for a home loan?
Obviously, a bank will consider issuing you a home loan if you have a sound track record with credit management. To be eligible, you show you pay your bills on time and in full.
You must be 18 years old, employed for six months, or self-employed for two years to be eligible.
Here are our top six pointers for navigating the application’s documentation requirements:
- As proof of income, you must produce your most recent pay stub. Some institutions may request your previous three salary statements, especially if they paid you on commission or work overtime. If you live in a community of property, your spouse handles the same.
- If relevant, you should have the last three months’ bank statements for both your own and partner’s accounts.
- They’ll require a copy of your Ghanaian ID document (and, if relevant, your partner’s)
- The bank will require your monthly income statement and spending, including monthly loan repayments and living expenses.
- The bank will request personal assets and liabilities.
- A copy of the purchase agreement will also be required.
Canceling a home loan is an important step in most property purchases. This can intimidate the first time you do it. Don’t be hesitant to seek advice from your bond originator. He can help you speed the process and save costs and penalties while locating new financing possibilities for your next real estate investment, according to the home finance expert.