There comes a time when we all outgrow our homes and it is time to move to a new home. Whether you need space for an office, a bigger garden for kids or in fact are retiring and looking to downsize, we all reach a point where selling our homes in the next step. But what happens if you still have a bond on your existing home?

This may worry first-time sellers but the good news is that this is a common scenario. In fact, with most home loans taking 20 – 30 years to pay back, most South Africans will still owe money on their homes when they are ready to sell and move to a new home.

Give your bank notice

When you sell your home, depending on the bank your home loan is held with, they require you to give up to 3 months’ notice that you will be settling your bond early. By doing this, you avoid early termination penalty fees. It is best to give your bank notice before the home is put up for sale as the notice period can be extended should the property take longer to sell.

Get your settlement figures

Once you have an offer to purchase on your property, your conveyancing attorney will contact your bank to get your bond settlement figures. This is the amount you still owe on your bond. The settlement figure will be deducted from the purchase price of your home and paid to the bank by the conveyancers on transfer.

Apply for a new home loan

When you’re ready to buy a new property, it is time to apply for a new home loan. If you’ve kept up to date with all your previous bond payments, you will likely have favour with the bank your bond was with and will probably get a good rate from them as they won’t want to lose you as a client.

While you’re waiting for your property to transfer you can apply for a property bridging loan to access up to 85% of your sale proceeds early.