Can I insist on a substitution of debtor?
My partner who is a joint bond holder in a house recently passed away. I requested a substitution to be the sole bond holder with bank but they told me I have to apply for a new bond. I did so and it was approved.
Now I have to go through a process of transfer and register a new bond at great expense just to remove one debtor’s name. They have also increased the rate on the new bond. Can I insist on a substitution of debtor without cancelling the existing bond and applying for a new one?
To remove your deceased partner’s name from the home loan you will need to do a substitution of debtor application with your bank. This application generally applies when a debtor applies to take ownership of the home loan into his or her name only. Unfortunately the application is seen as a new credit application and a full credit assessment is conducted solely on the applicant (on you) to verify affordability. Effectively the current loan ends and a new loan comes into being to cover the outstanding debt, with a new interest rate. I suggest that you speak to the bank on how to minimise cost. Being of good standing I trust they will bend over backwards to accommodate you.