How to Discharge a Mortgage?

Completing the last payment of your mortgage is always a cause to celebrate. It officially declares that property yours after years of hard work and keeping up with payments.

So how to discharge a mortgage? Here are steps on how to Discharge Your Mortgage:

  • Contact and tell your lender you wish to discharge your mortgage. 
  • Find a broker if you need one but it’s a straightforward process 
  • Fill out a discharge authority form 
  • Your bank will prepare a discharge of mortgage document to be lodged with the lands titles office. 
  • You can lodge the document yourself or they will do it for you and that’s it, you’ll own your home.

Mortgages are multi-year commitments and completing paying off yours is a major achievement. Many people struggle to make payments and sometimes it results in foreclosures.

In other cases, some of these loans are passed down from parents to children, which is common for 40-year mortgages.

Completing the payments means a person can now redirect their funds elsewhere for example savings or investments. 

What You Need to Know About Discharging a Mortgage  

When you discharge your mortgage, you are no longer under the obligation to pay any further. It removes the encumbrance on your title. The process takes about 10-15 days to complete depending on the lender. But sometimes lenders can take up to 4 weeks to process your request. You should also expect to pay a fee to complete the process. 

As the borrower, you have the choice of either going for a full discharge or a partial discharge. Partial discharges only apply when a person has multiple properties and choose to release one of them as security to the loan without having to repay the full loan. 

The Paperwork You Need

The discharge authority form is the main document you need to fill out. The document requires information such as; 

  • Full name of the borrower
  • Loan account number 
  • Contact information for mortgage broker/conveyancer
  • Property details
  • Loan guarantor names 
  • Contract of sale if you’ve sold the property

A Walk Through of the Process

The discharge of a mortgage is not a complicated process and it can be completed in 5 steps. 

Talk to your lender

The servicer of your loan should be among the first to know of the intention to discharge your loan. Their contact information should easily be found on the mortgage statements that they send every month. Talk to them on the phone or even visit their offices and confirm how long the process will take, and everything you need to do. 

Contact your Broker (optional)

The process is something you can handle on your own but if you feel you need help then contact a broker or a conveyancer to serve as an intermediary between you and the lender. If you already have a broker handling the transfer of your title, you can just call them to take care of this as well. 

Fill out the Discharge Authority Form

The document is normally found on the lender/bank’s website. But if you are close to one of the branches of the lenders you should just go down there and fill your form while ensuring nothing is left out. This eliminates the need to have to do it again if you miss something by yourself. 

Pay the Required fees

There is a fee you need to pay when discharging your mortgage and it varies across different lenders. However, the range is usually from $200 to $600. In case you are using a conveyancer for this process, they can take care of this fee and include it in the fee they will charge for their services. 

The Bank registers the discharge of mortgage. If your paperwork is good to go, the bank should prepare their discharge of mortgage document and lodge it with the Land titles division.  The bank will often do this themselves but they can also place the send the document to you to lodge it yourself. 

With that, the process should be complete. Now you can celebrate the full ownership of your house or even proceed to selling it. You should expect to receive your title through the mail after the lien on your house has been released.

Reasons for Discharging a Mortgage

There are 4 main reasons for discharging a mortgage. 

  • Full mortgage payoff 
  • Bankruptcy
  • Refinancing the mortgage
  • Selling your Home

After you complete Paying off the Mortgage 

When you are done paying the interest, fees, principal, and closing costs for your property or home, the lender will discharge your mortgage. At that point, the property ownership is transferred from your lender to you, the borrower. Finalizing this deal will involve the lender releasing the lien on your property and mailing you the deed. 

During the Process of Refinancing Your Loan

When you refinance a loan you are using another loan to pay off your existing one. People refinance their loans for different reasons including lower interest rates. In this case, the mortgage will have to be discharged to transfer ownership from the old lender to the new one. The new lender then places a lien on the property to secure their loan. 

Bankruptcy

If a person files for bankruptcy and it is finalized, the court discharges the mortgage thereby releasing the borrower from the payment obligation. 

However, they will not keep the property and it will instead have to forfeit the property to the lender and part ways. The borrower will not be under any obligation to pay any previous debts to the lender. 

Selling your Home 

If you intend to sell your home, then the existing mortgage is listed on your title and restricts you from transferring the title to a new buyer. It sometimes even reduces the value of your property and holds up the process of selling the home. So it’s better to discharge it immediately after paying it off.

Finally

This blog post has been a comprehensive guide to what you need to know about discharging your mortgage.

If there is any doubt, feel free to reach out and we will be happy to answer any questions that may arise or help clear up confusion on the topic.

We hope this article was helpful in explaining everything you wanted (or needed) to know!