Moving your bond is not that easy - you must cancel your existing home loan and take out a new one - and this costs money.
Some costs, like attorney's fees, bond initiation fees and valuation fees, can be negotiated with the bank.
BOND REGISTRATION FEES:
*These fees are paid to the attorneys appointed by the financial institution granting you the bond;
*They will charge you a fee to register your bond. It is based on tariffs recommended by the law society. But remember, it is up to you to negotiate with your bank the best fee for yourself.
A R50 000 bond will attract a fee of R1 220, a R100 000 bond will cost R1 687, a R200 000 bond will cost R1 960 and a R250 000 bond will cost R2 234. VAT has been included in these figures;
*Other costs charged by the attorneys dealing with the bond registration include a Deeds Office registration fee of R100 for bonds up to R150 000; R130 for bonds over R150 000 and R165 for bonds over R300 000;
*In addition, there is government stamp duty on the bond calculated on the basis of 20c per R100 or part thereof. For example, you can expect to pay stamp duty of R100 on a bond of R50 000 and R200 on a R100 000 bond.
* The conveyancer also charges for sundry items. This varies between attorney firms, but is about R120.
* Bond cancellation fee: Banks charge you a bond cancellation fee of between R450 and R650 for every bond that you cancel. This is paid to the bank's attorneys for the work they do to cancel your bond at the Deeds Office.
OTHER FEES:
* A sectional title insurance certificate costs about R110. It is paid to the sectional title body corporate or the managing agents who have been appointed to manage, say, the block of flats. It is their duty to ensure that the building is covered by insurance and to apportion the costs between the flat owners. They must supply the bank with a certificate showing that the flat is covered under a valid insurance policy with a recognised insurer;
* Deed of suretyship: There are various instances in which banks require suretyships and instruct the attorneys registering a bond to prepare the deed of suretyship. The cost is between R100 and R150.
For instance, when a property is bought in a close corporation, company or trust, the bank may want individuals to be accountable for the loan through a deed of suretyship;
* Stamp duty of about R20 is payable on a deed of suretyship.
Over and above the fees payable to attorneys registering the bond, the bank which is granting you the loan has certain charges.
FEES CHARGED BY THE BANK:
In terms of the Usury Act, there are three fees relating to bond finance which banks may charge.
* A valuation fee (also called a security assessment or inspection fee) is levied to cover the costs of a bank-appointed inspector. The inspector has to determine whether the bond applied for is covered by the value of the property as it is the bank's security if you default on your loan repayments.
For properties over R50 000, the valuation fee is 0,2 percent of the value of the property to a maximum of R969, including VAT. The minimum fee is R112,50. On a R100 000 house, you can expect to pay R228 in valuation fees;
* A bond initiation fee of R199,50 including VAT may be levied. This covers the costs of interviewing you, preparing documents and starting the home loan process.
If the bank where you are applying for a loan is keen to get your business, it may discount or even waive the valuation and bond initiation fees; and
* A monthly administration fee of R5,63, including VAT, is also charged. This is usually added to your monthly instalment.