What to do after your final bond repayment

The final repayment on your home loan is a long-awaited victory 20 to 30 years in the making. But, while most people have been dreaming about this day from the very first repayment, most fail to consider what will happen afterwards.

According to regional director and chief executive of RE/MAX of Southern Africa, Adrian Goslett, home owners can choose either to make the last repayment and close the home loan facility or continue to pay a monthly fee to keep the home loan facility open as a readily available line of emergency credit.

“The interest charged on a home loan is often lower than the interest charged on any other form of debt, such as credit cards or short-term loans. Some therefore choose to keep their home loan facility open in order to have access to the funds should they come to need it at a later stage,” Goslett says.

Mary Lindemann of mortgage originator BetterBond, says that home owners can close their home loan accounts for a cancellation fee of around R4 000, after which the bank will release their property title deeds to them.

“The other option is to keep the account open and, if you don’t already have one, add an access facility to the account that will allow you access to the original home loan amount that you were granted. This offers some peace of mind provided that the facility is vigilantly managed and any amount that you re-borrow is repaid as soon as possible,” Lindemann says.

She says home owners need to let their banks know of their intention to either keep the home loan facility open or to close it before they make the final repayment.

Goslett recommends that home owners start weighing up their options around this decision long before their final statement arrives.

“This is not a straightforward decision to reach. I would recommend taking the time to work through the various pros and cons of each option before arriving at a final decision. Speak to your bank to find out about the various costs involved and consult a financial planner to get some professional advice on the way forward,” Goslett concludes.