The When and How of Discharging Your Mortgage
When you discharge your mortgage you’re removing the mortgage from the title of your property.
Before your mortgage is repaid in full the bank holds the title to your property. This means that in certain circumstances you will need to take the steps to discharge your mortgage and remove the lender from the property title.
When is it necessary to discharge your mortgage?
Generally, there are three situations in which you would need to discharge your mortgage – when you’re selling the property, if you’re refinancing to another lender, and of course, when you’re paying off the property in full.
Discharging your mortgage is a necessary step when selling your home as settlement can only occur once it has been completed. There are situations in which you may want to keep your mortgage instead of taking out a new loan. If that is the case you can consider a substitution of security, which will allow you to transfer your mortgage from your old property to your new one.
A refinance requires discharge before you can move your mortgage from one lender to another.
Whether you have a split mortgage and are paying off one part of it, or if you have a standard mortgage and are paying it off in full you will have to go through the formal process of discharging your mortgage. There are, however, some circumstances in which it is better to keep the mortgage facility open – such as keeping access to a redraw facility.
What steps do you need to take to discharge your mortgage?
It’s important to follow the correct steps when discharging your mortgage to avoid the kinds of delays that can cost you time and money. If you’re working with a broker they will be able to help you navigate the process and ensure everything goes as smoothly and quickly as possible.
- Talk to your lender.
Letting your lender know your plans for discharging your mortgage is an important first step, regardless of whether you’re selling, refinancing, or paying out your loan. They will let you know what documentation you will need to fill out and submit. - Complete the Discharge Authority form.
Completing the Discharge Authority form should be done as soon as possible, especially if you’re selling, as it will usually take around two weeks for the paperwork to be processed. If you’re worried about completing the form correctly you can fill it out in person at a branch – the staff will be happy to help you through the process. - Register your discharge.
You have two choices when it comes to registering your Discharge of Mortgage – either the bank can register it with the Land Titles office on your behalf, or you can have the necessary documentation sent to you to register it yourself. The fees and processes vary state to state, so make sure you’re aware of how the process works where you live if you decide to do things yourself.
