Thinking of switching home loans, refinancing or paying the balance of your mortgage off, but not clear how much the mortgage discharge fee could be?
This Q&A is a short overview of discharge fees, including how you go about discharging your mortgage. Without completing this important step you are unable to sell a property or finalise the mortgage, even if you have paid your loan in full.
Let’s start by understanding what ‘discharge’ means in the context of home loans and mortgages, followed by the most frequently asked questions about this topic.
In the context of home loans and mortgages ‘discharge’ simply means to end, and is the process of removing a home loan from a property’s title. This is because your lender holds the title on your property until you have completely repaid your home loan.
Without the mortgage being discharged settlement cannot take place, and the new owner cannot take ownership of the property. In terms of the legal process, a mortgage is discharged by filing the request at your state’s Land Titles Office.
There a number of scenarios when you may need to discharge your mortgage, including when you:
• Sell your property, so the buyer can take legal ownership of the property.
• Refinance your home loan or switch to another mortgage.
• Payout the remaining debt on your home loan.
Your lender needs some time to process all the paperwork to complete the mortgage discharge. This can take anywhere from 10 to 21 business days, assuming there is no cause for delay. If you forget to sign something or do not submit all the required documents, you risk extending this timeframe.
Tip: If you are selling your property your conveyancer or solicitor can help you submit all the relevant paperwork, so you avoid any delay in the discharge process.
Lenders will typically charge a set fee if you want to discharge your mortgage. This is to cover the legal and admin involved in processing this paperwork. You may also hear lenders refer to an exit, termination or settlement fee.
Mortgage discharge fees are set by individual lenders and can range from $350 to $1,000. If you are refinancing a fixed term mortgage you may also have to pay a break fee. You should calculate if it is worthwhile paying a break cost, as in many cases it’s the same as paying a higher rate until the end of your fixed-rate term.
Other fees you'll likely to be asked to pay may include:
• Any interest or penalty interest due.
• Break costs if you have a fixed-rate home loan and are discharging it before the fixed period ends.
• Any legal fees incurred by the lender.
• Government fees and charges for your Discharge of Mortgage and Registration of Title.
• Any application or loan establishment fees if you're refinancing your mortgage.
If you want or need to discharge your mortgage the first thing to do is contact your lender. They will provide you with a discharge authority form to fill out.
Information required in this form typically includes:
• Details of all borrowers listed, including any guarantors
• Home loan account numbers
• Name of your new lender and legal representative
• Details of your bank account, where fees are to be credited to or debited from
Your lender’s legal representatives then process the discharge request with your state’s Land Titles Office.
You should now have a good idea of all the costs involved with discharging your mortgage, so you can budget for these in advance.
Have more questions about mortgage discharge fees? Get in touch and our team will answer all your questions at a time that suits you.
New loan inquiries: hello@yard.com.au
Service requests: help@yard.com.au
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