Discharging a mortgage means removing it from the title to your property.
Did you know that your bank holds the title to your property until your home loan is completely repaid? Besides, once you have repaid the mortgage in full, you need to follow a set procedure to discharge it or clear the title to your property.
Why do you need to discharge a mortgage?
Apart from repaying your mortgage in full, there are certain other situations when you might want to discharge your home loan, such as when you intend to refinance or sell your home.
For example, when you are selling your house, any existing mortgage or lien on it would be listed on your title as an encumbrance. Unless discharged, an encumbrance can restrict your ability to transfer the title or reduce the value of your property. Thus, if you plan to sell your house, it is important to discharge the mortgage in time to avoid any delays in completing the sale. In case you have used more than one property to secure a home loan, it is possible to request a partial discharge, too.
Refinancing requires a formal discharge of mortgage because you are closing one facility to open another with the same or different lender. Note that if you are repaying a fixed loan before its term, break fees or discharge fees may be applicable. It is best to speak to your lender to understand the costs associated with discharging your home loan better.
How to discharge your mortgage?
Discharging a mortgage is an important process, which, if not followed correctly, can delay a future sale, costing you time and money. Fortunately, releasing a mortgage is a simple process. Here’s how to discharge your mortgage:
Speak to your lender – The first step is to contact your lender and discuss your plan of releasing the mortgage with them. The lender will ask you to complete a Discharge Authority form, which is available on a lender’s website in most cases, to initiate the process.
Complete the paperwork – The next step is to complete the Discharge Authority form and return it to your lender. It is advisable to visit a branch and fill up the form with a banker to ensure it is properly completed and lodged with the right department in a timely manner.
Register the discharge of mortgage – Once you return the Discharge Authority form, your bank would prepare a Discharge of Mortgage document. This document must be registered at the Land Titles office. Your bank will lodge the paperwork with the Land Titles office on your behalf or send you the necessary documentation to register yourself. Get in touch with a mortgage broker to understand the process better. It usually takes between two to three weeks for the discharge to take place.
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By Vidhu Bajaj,
HashChing Content Writer