Discharging your mortgage is one of the most important steps involved in your homeownership or investment property journey – and understanding how the process works can help you save a lot of time, effort, and money.

What does it mean to get rid your mortgage?

The bank holds the title to your property until you pay off the home loan. You must pay the entire mortgage amount. The lender will be removed from your title and the loan can be discharged. This is also known as mortgage discharge, or mortgage release.

Home loans can be repaid at any stage during the loan term. These are just a few examples of situations in which you may need to file a disbursement request with your lender.

1. You have paid all the loan amount to your lender and want to get the property free of mortgage

Your mortgage is not automatically released by your home loan payment. A mortgage discharge needs to be filed and recorded at your state’s Land Titles Office to legally release your lender from mortgage obligations.

2. You want to sell your home

In order to avoid any delays in settlement, ensure that your mortgage has been paid off before you sell the house. A home loan that is still owing on your title will be added to your title as an interest. This could limit your ability transfer the property.

3. Refinance a loan with your bank or another lender

You will need to discharge your mortgage if you refinance a home loan. Because you are opening a new loan, and closing another loan. You may also have to pay additional fees for loans that are not paid within a certain time. 

4. You want to cancel a family guarantee on a home loan

Refinancing can be the best way for a family member to get out of a loan, credit line or loan. Refinancing requires that your mortgage be discharged.

What are the steps required to get your mortgage paid off?

It is easy to release your mortgage, but it can lead to costly consequences. These are the steps you should follow to release your mortgage.

1. Contact your lender

First, contact your lender to discuss your intentions of releasing your home loan. Your lender will ask you to complete a discharge author form. These forms can be found often on their website.

2. Complete the paperwork

The discharge form may be required.

  • Details of all borrowers – including guarantors – properties, and home loan account numbers
  • Information about any authorized representatives to discharge the debt including details of your broker, solicitor and other lenders
  • You can request a reimbursement, excess funds or payment fees to the bank state branch (BSB).

If you are planning to sell your property it is essential that you complete the discharge form as soon as possible. Processing time can take anywhere between 10 and 21 business days. For assistance, you can also visit your bank. The law may also require sellers to sign the contract.

3. Register the mortgage release

Once you have provided the discharge authority, your lender will prepare your discharge mortgage document. This document must be registered at your state’s Land Titles Office, either by your bank or yourself. Should you decide to register the document on your own, it is best that you check out the process through your state’s Land Titles Office website, where you can find the steps and fees you need to pay.

How much does discharging a mortgage cost?

A mortgage release can cost between $160 and $600. This amount may change each year and could be higher or lower depending on where it is located. In Queensland, for example, the amount is dependent on how many people are making the mortgage payment. The current rate for one person is $175, and it’s $350 for two. This includes the break costs when refinancing fixed-term mortgages.