Where a property is subject to an existing mortgage bond, the bond must first be dealt with before the half-share transfer can be registered. There are generally three available options.
The first option is for the existing mortgage bond to be settled in full and cancelled.
The second option is for the purchaser to register a new mortgage bond in their own name in order to facilitate the cancellation of the existing bond.
The third option is for the purchaser to apply to the existing bondholder to take over the mortgage bond in their sole capacity. This process is known as a Section 57 Substitution of Debtor. One of the advantages of this option is that the prescribed conveyancing tariff allows for a 25% reduction in registration fees.
Where the existing bond is not cancelled, the purchaser will still be required to apply to the bank in the normal manner and must qualify for the bond in their own name and on their own financial merit. This requirement should not be underestimated, as it often plays a significant role in the successful conclusion of the transaction.
