Discharging a mortgage
What is a mortgage discharge
A mortgage is a loan secured by property, such as a home. When you take out a mortgage, the lender registers a lien, also known as an interest in, or a charge on, your property. This means the lender has a legal right to take your property in some situations. They can take your property if you don’t respect the terms and conditions of your mortgage like paying on time and maintaining your home.
When you pay off your mortgage and meet the terms and conditions of your mortgage agreement, the lender doesn’t automatically give up the rights to your property. There are steps you need to take to remove those rights. This process is called discharging a mortgage.
What to expect when discharging your mortgage
A mortgage discharge is a process involving you, your lender and your provincial or territorial land title registry office. You may also need the services of a professional such as a lawyer, a notary or a commissioner of oaths.
Processes and fees vary depending on the province or territory where your property is located. In most cases, you’ll work with a lawyer or a notary. Some provinces and territories allow you to register the discharge yourself. Keep in mind that even if you register the discharge yourself, you may have to get documents signed by a professional.
Your lender’s role
You must get confirmation from your lender that you can discharge your mortgage. This happens after it is paid in full and you have met the terms and conditions of your mortgage agreement. Most lenders don’t provide this confirmation unless it is requested. In some cases, the lender will prepare discharge documents on your behalf. Check if your lender has a formal process for this type of request.
Your land title registry office’s role
Land title registry offices are part of your provincial or territorial government. These offices register official property-related documents and maintain the title registry.
Once you, your lender, your lawyer or your notary provide your land registry office with all the required documents, as laid out in their process, they will remove the lender’s rights to your property. The title of your property will be updated to reflect this change.
When can you discharge your mortgage
There are a few occasions when you can discharge your mortgage.
Discharging after paying off your mortgage
You, your lawyer or your notary can discharge your mortgage once you have paid it off. You may also want to make sure you don’t have any amount owing on any related financial products. For example, if you have a home equity line of credit (HELOC) combined with your mortgage, you may need to pay it off and close it before you can move forward with a mortgage discharge.
You may not want to discharge your mortgage if you plan to use your home as security for a loan or line of credit with the same lender. When you discharge your mortgage, you may lose access to mortgage-related products. This includes a HELOC if it’s combined with your mortgage.
Discharging when changing lenders
You may choose to renegotiate your mortgage contract and change lenders because another lender offers you a better deal. When you change lenders, the information on your property’s title must be updated. In most cases, you, your lawyer or your notary must discharge the original mortgage and add your new lender to your property’s title. Some lenders charge other fees, including assignment fees when you switch to another lender. Ask your new lender if they will cover the costs of a mortgage discharge.
Discharging before selling your property
In most cases, you must get a mortgage discharge when you sell your property. Once the discharge is complete, the lender’s rights are removed from the property.
You will not need a mortgage discharge if you have an assumable mortgage and you’re transferring the mortgage to the new owners of the property.
How much discharging a mortgage can cost
When you discharge your mortgage, you may have to pay fees.
Mortgage discharge fees
When you request a mortgage discharge, your lender could charge you fees. Some provinces and territories have rules in place that regulate the maximum amount a lender can charge for a mortgage discharge. The amount you will need to pay will depend on your lender and on the provincial or territorial legislation.
In cases where the mortgage discharge fee isn’t regulated, the lender can set their own fee. This typically ranges from no charge, up to $400. For more information on mortgage discharge fees, check the terms and conditions of your mortgage agreement.
Federally regulated lenders, such as banks, must disclose the mortgage discharge fee in your mortgage agreement. If this fee wasn’t disclosed, contact FCAC to file a complaint.
In some provinces and territories, you must work with a professional to discharge your mortgage. This can include a lawyer, a notary or a commissioner of oaths. You may have to pay fees for these services. Typically, the fees for these services range between $400 to $2,500.
Where to get more information
For more information on your province or territory’s mortgage discharge process, you can visit its land registry, land title or government website:
- British Columbia
- New Brunswick
- Newfoundland and Labrador
- Northwest Territories
- Nova Scotia
- Prince Edward Island
Making a complaint about your mortgage
If you have a complaint related to your mortgage, you should contact your lender.
All federally regulated financial institutions must have a complaint-handling process in place.
If your lender is provincially or territorially regulated, contact the appropriate provincial or territorial regulator.
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