What Is Mortgage Discharge? How It Works, Fees, and More!

Mortgage discharge is the process of removing a mortgage from the title of your property.

Officially removing the lender from your property means you get to do whatever you please with the property from then on. You can sell it, refinance the loan, hold clear ownership for any future home loans, etc.

In this article, we’ll cover everything you need to know about mortgage discharge, how it works, the fees associated with it, and more.

Let’s get into the details.

What Is Mortgage Discharge?

Mortgage discharge means removing the security of your mortgage (your house) and placing the entire ownership of the security on you.

Upon submitting the mortgage discharge form, you are requesting the lender to officially and legally release their claim on your property, which gives you complete ownership.

While it is most often used when you’ve repaid the entire mortgage, there are also other cases where mortgage discharge is necessary.

When to Use the Mortgage Discharge Form?

There are 3 scenarios that make discharging your mortgage necessary. We’ll look at each of them in more detail here.

When You’ve Repaid Your Home Loan

The first case is when you pay off your mortgage entirely and want the lender to release the mortgage from your property.

Because once the loan is fully repaid, that, in theory, means you have complete ownership of your property. But a mortgage discharge document is what proves you do.

When You Want to Sell the Property

The second common case is when you want to sell the property. The mortgage appears as an encumbrance on your property, and it needs to be removed if you want to complete this real estate transaction.

In contrast, if you want to carry over the mortgage to a new property, you can do so with a substitution of security. This will transfer the mortgage from the property you’re selling to the new one.

When You Want to Refinance

You need to discharge your mortgage if you want to refinance your current loan with another lender. Since your lender is changing in this refinancing process, mortgage discharge will remove your old lender from the ownership of your property.

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Mortgage Discharge: The Step-By-Step Process

The processing time for mortgage discharge usually takes 10 to 21 days, with multiple steps and paperwork involved.

While you can handle it yourself, we highly recommend that you bring in your own financial advisor or legal professional to assist you in the process.

1. Contact the Lender

The process of mortgage discharge starts with contacting your lender to initiate the process.

In most cases, if you’re paying off your loan or refinancing it with a different lender, your current or new lender would take the initiative to process the discharge. But if they don’t, bring it up with them.

2. Complete the Necessary Paperwork

Mortgage discharge involves a lot of paperwork. But these are usually the requirements associated with the mortgage discharge form:

• Details of all borrowers named on the mortgage.

• Details of the property.

• Loan account number.

• Bank account details for any final money settlements like excess funds or refund of any fees or charges.

3. Submit to the Respective Land Registry or Authority

Once the paperwork is complete, you need to use those documents to register the discharge of your mortgage with the land title office in your state or territory.

• If you’re refinancing, your new lender will handle this for you by working with your old lender.

• If you’re selling the property, you may do it yourself or have your financial advisor do it for you.

• If you’re paying off the mortgage entirely, you may do it yourself or ask your lender to do it for you.

In case you’d like to do it yourself, keep in mind that each state and territory has its own processes and fees for land titles, so be sure to check your respective government website for details:

• New South Wales

• Queensland

• Australian Capital Territory

• Northern Territory

• Victoria

• Tasmania

• Western Australia

• South Australia

The paperwork, requirements, and submission can be overwhelming, so we advise you to keep a financial advisor or a legal professional in the loop.

Once the mortgage discharge form is submitted, your lender will be removed from the ownership of your property. This process usually takes 10 to 21 days.

Full vs. Partial Mortgage Discharge

A full mortgage discharge is needed when your mortgage is tied to only a single property as security.

On the other hand, a partial mortgage discharge is required when you have multiple properties tied to a single mortgage and you wish to remove one or more of the properties from the lender’s ownership.

The paperwork involved in a partial discharge is slightly different, as you would have to provide two additional details:

• Sale price if you are selling a property.

• And estimated value of the remaining properties.

A partial discharge may also take longer, depending on your lender. If they need a valuation done on your remaining properties, the entire process could take up to 28 days.

Mortgage Discharge Costs and Fees

The costs associated with mortgage discharge vary by lender and your state or territory. But here’s a quick breakdown of the potential costs you can expect:

• Lender’s discharge fees.

• Lender’s legal fees.

• Government or land registry fees.

• Administrative or processing charges.

• Break costs if you are discharging a fixed-rate mortgage before the fixed term is completed.

• Any application fees if you're refinancing your mortgage.

FAQs on Mortgage Discharge

What documents are needed for a mortgage discharge?

These are usually the basic details needed to complete the necessary paperwork for a full mortgage discharge:

• Details of all borrowers named on the mortgage.

• Details of the property.

• Loan account number.

• Bank account details for any final money settlements like excess funds or refund of any fees or charges.

If you’re doing a partial mortgage discharge, you may also need to submit the sale price (if you are selling a property) and the estimated value of the remaining properties.

Can I handle the process myself, or do I need a lawyer?

You can handle the entire mortgage discharge process yourself. However, it’s a lengthy process involving a lot of paperwork and legalities, so we highly advise you to seek help from a financial advisor or a legal professional.

What happens if I don’t discharge my mortgage after paying it off?

The bank will remain an owner of your property, which can make it harder for you to sell the house or refinance the loan.

It’s worth noting that banks will usually send you the discharge when you pay off a loan with them. If you suspect they haven’t, check any files or emails from the bank at the time of closing the loan.

If there’s any document associated with the discharge, you just need to use that to register with your respective land title office.

If not, just reach out to the lender and let them know you’d like to get the discharge done.

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