Understanding Bond Costs in South Africa - A Useful Guide

Registration and Cancellation

 

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What is a Bond?

  A bond, also known as a mortgage bond or home loan, refers to the money borrowed by an individual or entity from a lender to buy a property that is pledged as collateral to the lender. A lender is also called a mortgagee while a borrower is also referred to as a mortgagor.  

Quick Overview of Understanding Bond costs in South Africa

✔️What is a bond? ✔️Providers of bonds ✔️Some requirements pertaining to bonds or home loans Mortgageable properties Costs pertaining to the registration of bonds/home loans in South Africa Bond costs calculator Costs pertaining to the cancellation of bonds/home loans in South Africa Bond cancellation costs payable to a bond cancellation attorney/conveyance attorney Refunds  

Providers of Bonds

 

• Commercial banks - there are numerous banks that offer bonds to the public to enable them to become owners of property. Home loans is a major portion of a bank’s business.
• Financial institutions - mortgage finance providers that specialise in bonds or home loans.
• Bond originators - institutions that act as intermediaries between a borrower and various bond providers. The bond originator will apply and negotiate on your behalf to obtain the best possible deal for you.

 

Some Requirements pertaining to Bonds or Home loans

 

Payment period

  The terms of a bond largely depend on the requirements of a bond provider and the borrower’s credit rating. There could also be additional requirements for first-time home buyers. Usually, borrowers are allowed to repay bonds or home loans over a period of 20 years. Some bond providers even allow mortgagors to pay back their bonds over a period of up to 30 years, depending on the loan amount and the borrower’s financial situation and age. The bond repayments are made monthly to the bond provider for the agreed upon payment period.  

Deposits

  Nowadays, most banks require a deposit of at least 20% to 30% of the purchase price from borrowers to obtain a bond to buy a property. A deposit reduces the bond amount needed and consequently reduces the monthly bond instalments and the interest payable on the bond. The deposit does not cover bond registration fees and initiation fees. Typically, the deposit is paid to a legal practitioner, referred to as a transfer attorney or conveyancer, who specialises in attending to the transfer of ownership of property. The deposit is paid over to the bond provider upon registration and any interest accrued on the bond is paid to the borrower.  

Mortgageable Properties

  Not all types of properties are susceptible to being mortgaged. Put differently, not all properties can be used as collateral for a loan to purchase the property. According to Private Property South Africa Limited, mortgageable properties include:

• Houses in residential areas as well as in security states.
• Dwellings still to be constructed.
• Vacant stands.
• Cluster homes.
• Holiday homes or second homes.
• Flats.
• Townhouses.
• Sectional title units.
• Duet houses.
• Semi-detached houses.
• Residential property utilised for business purposes.
• Agricultural holdings (not larger than 8.5 hectare).

Furthermore, Private Property South Africa cites the following properties that do not qualify as mortgageable properties:

• Agricultural holdings (larger than 8.5 hectare).
• Blocks of flats.
• Share block schemes.
• Timeshare schemes.

In addition, needless to say, the following aspects will also disqualify a residential property to be utilised as collateral:

• If a property is in such a poor condition that it is uninhabitable.
• Unconventional properties or properties of non-standard construction.

 

Costs pertaining to the Registration of Bonds/Home loans in South Africa

 

Bond registration costs payable to the Deeds Office

  After the authorisation of a bond by a bond provider, the bond is registered over the particular property’s title deed at the Deeds Office by a registering attorney, also known as the bond attorney. To ratify the bond registration, a bond registration fee is payable, which is determined by the Deeds Registries Regulations Board and vary according to the bond capital amount. Effective from April 1, 2026, the registration costs are currently:

The registration costs are paid to the bond attorney who pays the money over to the Deeds Office.  

Bond attorney fee (Conveyancer fee)

  A fee is payable to a bond attorney for administering and managing the bond process, inter alia, to register the bond. The fees are recommended by the Law Society of South Africa. However, the fees may differ from law firm to law firm. Fees payable to bond attorneys are always subjected to value added tax (VAT). The amount varies according to the home loan account. For example:

• On a bond of R100 000 or less the fee is R5 750 (VAT of 15% included).
• On a bond of R1 000 000 the fee is R21 689 (VAT inclusive).
• On a bond of R2 000 000 the fee is R30 544 (VAT inclusive).
• On a bond of R3 000 000 the fee is R39 399 (VAT inclusive).

 

Sundries

  There are other costs payable, referred to as sundries, to the law firm that conducts the application for the bond registration. Typically, the amount is fixed and vary from law firm to law firm. Nowadays, a typical amount for sundries is about between R1 200 and R1 500, payable before the registration of the bond. Sundries include expenses such as postage, petties, electronic instruction and generation fees, and Deeds Office searches.  

Bond initiation fee

  A bond initiation fee is charged by banks to initiate the bond/home loan and to open the bond account. Some banks use a base fee plus a percentage of the loan amount, while other banks charge a flat rate - currently, as of November 2026, about R6 000 (VAT inclusive). Keep in mind, you will still be obliged to pay the fee if the bond application is unsuccessful. There are two ways to pay the bond initiation fee: the fee can be paid as a once-off payment or it can be included in the loan amount to be paid over the period of the bond.  

Administration fee

  The bond provider will charge a monthly administration fee to administer the loan account. The amount differs from provider to provider but is generally between R60 and R80 per month. The administration fee will be debited to the loan account.  

Insurance

  Typically, banks will require borrowers to have insurance that will settle outstanding bond amounts in the event of death, disability, and (sometimes) retrenchment. Most banks offer insurance cover. However, you are not obliged to take up the bank’s offer. Instead, you can either cede some of your existing insurance cover to the bank, or you can take out insurance cover with a service provider of your choice. Usually, it is more cost effective to make use of your own service provider. Contact a trusted and authorised financial advisor to help you with your insurance cover. If you make use of the bond provider’s insurance, the monthly premium will most likely be added to your bond account. Bear in mind, the monthly premium that you will pay is determined by various factors such as, your age, health profile, type of occupation, gender, smoker, or non-smoker. The amount to be covered by insurance depends on the outstanding amount of the bond.  

Bond costs Calculator

  Almost all the bond providers in South Africa provide bond costs calculators on their websites.  

Costs pertaining to the Cancellation of Bonds/Home loans in South Africa

 

Reasons for a bond cancellation

  There are a number of reasons behind the cancellation of a bond with a bond provider, namely:

• The loan amount has been paid back in full.
• A property that was used as collateral, is
• A borrower opts for an early settlement.

 

The 90-day notice period

  When you want to cancel your bond, whatever the reason, you have to notify the lending institution in writing (written or emailed letter) of your intention. Bond providers require a 90-day notice period when a borrower intends to cancel a bond before the end of the agreed upon loan period. The National Credit Act (Act 34 of 2005) allows banks to charge a 90-day termination fee (also referred to as penalty interest) if a an individual or entity indicates the intention to prematurely end the bond. The 90-day notice activates the so-called penalty period, implying that if the bond is cancelled during this period, the seller of the property will be obliged to pay penalty interest. The penalty period of 90 days may vary, depending on the terms and conditions in the loan agreement. The penalty interest’s calculation is based on the outstanding amount due from the date on which the notice was given or when the conveyance attorney requests bond cancellation figures. However, this may vary from lending institution to lending institution. Although, the 90-day notice period will be waived by the lending institution, such as a bank, in the following circumstances:

• If the seller of the property has been sequestrated.
• If the property is part of a deceased estate.
• If a new property is bought and a new bond is arranged with the same financial institution.

To remember, giving a 90-day notice to the bond provider is not actually cancelling the bond in 90 days. It is only to let the financial institution know of your intention to sell the particular property. If the sale of the property is not finalised within the 90-day period, you will simply be required to renew the letter of intent. The bond will not be cancelled until when the bond cancellation attorney (conveyance attorney) requests the cancellation figures from the bond provider.  

Calculation of penalty interest

  Let us say, you have a capital amount outstanding of R751 230 on your bond account with an interest rate of 8% applicable to the loan. You give the bond provider notice of your intention to cancel the bond on November 3, 2026. As mentioned, the bond provider is allowed to charge penalty interest which will be calculated as follows:  

The penalty interest period will be effective from the date on which the bond provider receives the 90-day notice, and the penalty amount will reduce until the 90-day period has lapsed. Starting on November 3, 2026, the penalty period will lapse on January 31, 2026. For instance:

• If your bond cancellation is registered on January 31, 2026, zero penalty interest will be payable.
• If your bond is cancelled on December 15, 2026, you will be liable for penalty interest from December 16, 2026 to January 31, 2026 (47 days), amounting to R7 738.55 (R164.65 x 47 days).

Typically, it takes about 6 weeks (42 days) to cancel a bond, implying that a borrower will be liable for at least half of the penalty interest charged.  

Bond cancellation figures

  It is near impossible to accurately predict the exact date on which a bond will be cancelled. It may well be the situation that the amount eventually payable will exceed the cancellation figures initially obtained. Typically, the cancellation figures are valid for a period of 90 days. The following common items are typically included in the cancellation figures. It may differ from bond provider to bond provider:

• Outstanding balance due on the bond on the date the figures are issued.
• Interest accrued on the outstanding balance, calculated from date of issue of the cancellation figures to when payment is received.
• Instalment of one month, which is a contingency amount.
• Insurance premiums (if applicable).
• Service fees (including bank fees).
• Legal fees (if applicable due to legal proceedings).
• Early settlement fee (also called the penalty fee).

 

Bond cancellation costs payable to a bond cancellation attorney/conveyance attorney

  In order to register the cancellation of a bond against the title deed of a property at the Deeds Office, the service of a conveyance attorney is required. The cancellation costs differ from law firm to law firm. Nowadays, the going rate is about R4 500 to R5 000.  

Refunds

  Any excess funds after the bond cancellation has been registered in the Deeds Office will be refunded to an account nominated by you.    

Frequently Asked Questions?

   

How much are bond costs in South Africa?

Here is a useful bond cost guide that will answer all your questions.  

How much are bond cancellation costs in South Africa?

Bond cancellation costs differ from law firm to law firm.  The going rate at time of writing is about R4 500 to R5 000.

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