Discharge of mortgage

Are you aware of the circumstances surrounding a discharge of mortgage? Why is it important and when will I need to apply for one? Savvy’s here to inform you and help you through the process.

Discharge of mortgage explained

What is a discharge of mortgage?

To discharge a mortgage means to remove a mortgage from your property’s certificate of title. Until you pay back the mortgage in full, your lender is the holder of the property’s certificate of title. Once a discharge of mortgage is completed, your lender will be released from mortgage obligations and the certificate of title will now be in your hands.

When would I need a discharge of mortgage?

A discharge of mortgage will be necessary in the following situations:

  • Selling your home – once a property is sold, the seller has to discharge the mortgage so the property’s buyer can take legal ownership of the property.
  • When paying off your home loan in full. This will give you official ownership of the certificate of title.
  • If the mortgage is paid off but documents to remove the mortgage from the certificate of title are yet to be lodged.
  • When refinancing your home loan to a different type of loan or a different lender.

How long does a discharge of mortgage take to process?

A discharge of mortgage will usually take 14-21 days to process. In years gone by, processing times could take as little as 10 days. However, due to a rapid rise in the number of refinanced home loans taking place, these waiting periods have been set back. Processing times may vary between lenders and depend on the circumstances surrounding each individual discharge of mortgage.

 

What could happen if I do not complete a discharge of mortgage?

A discharge of mortgage is something that must be completed as early as possible in any of the above situations. In the instance of selling a property, if the discharge of mortgage is not done correctly or on time, it could result in a lengthy delay in the settlement of the sale. In addition, when selling a house, a mortgage is listed on your title as an encumbrance and unless discharged, this could hamper your ability to transfer the certificate of title or even reduce your property’s value.

How to discharge your mortgage?

The process of discharging a mortgage is very important and must be done correctly. Follow the guide below to begin the process.

Top tips when discharging a mortgage

Discharging a mortgage should be a simple process but you must make sure you don’t take short cuts. Follow these tips to avoid any problems.

Contact your lender and visit in person to get a full run down on what will be required of you to discharge a mortgage.

Complete the relevant discharge authority forms as quickly as possible and double check they are filled out correctly with your lender.

While some lenders will file the discharge of mortgage documents on your behalf to the Land Titles office, others may require you to do so on your own. Do not rely on your lender to do the job for you and instead clarify what steps you will be responsible for.

Frequently asked questions about discharging a mortgage

Have any final questions about the discharging of a mortgage? Here we answer the most commonly asked questions.

How much does a discharge of mortgage cost?

A discharge of mortgage will typically cost around $160. However, you may incur extra costs if you are refinancing from a fixed rate home loan. Exact costs may vary between states/territories.

Will the process of discharging a mortgage change on a variable or fixed-rate mortgage?

No, the process of discharging a variable or fixed-rate mortgage remains the same. However, as mentioned above, each may incur different costs depending on how your lender assesses the situation.

What’s a certificate of title?

A certificate of title represents an official record of land ownership. The certificate also features encumbrances which apply to the land. When applying development applications or seeking council approval for property developments, a copy of your certificate of title will be needed.

Where can I access my certificate of title?

Each Australian state and territory has its own registry which holds certificates of title for all land in that particular state. 

What’s an encumbrance?

An encumbrance as listed on a certificate of title, is a type of registered interest in a property by a party who is not the property’s owner. Types of encumbrances can include mortgages, easements or restrictive covenants which apply a restriction on specific uses of the land. Encumbrances can reduce a property’s value and hamper a property’s transferability.