Getting a Home Loan in Australia if you're living overs...
29 Nov 2023
Paying off your very last mortgage repayment is a cause for celebration. All those long years of working hard and chipping away at your loan has finally ended. Or, perhaps you’ve sold your home and a new buyer is ready to move in.
Before you wave your home loan goodbye, there’s still one last important thing to do.
You need to complete something called a discharge of mortgage. Here's everything you need to know about how a mortgage discharge works and how much it costs.
A mortgage discharge is a legal document that serves as proof that the property is no longer encumbered by the mortgage. It indicates that the mortgage has been repaid in full. For borrowers, this can be a significant milestone as it means that they have paid off their debt and have full ownership of the property.
When you have a home loan, the bank holds the Certificate of Title on your property until the home loan is repaid. As such, once the home loan is repaid, a mortgage discharge is needed to remove the lender from your title.
A mortgage discharge is also important for borrowers who are looking to sell their property, as they will need to provide evidence of the discharge to the new buyer.
Discharging a mortgage typically takes up to 10-15 business days to complete, however it does vary according to the lender. On the other hand, a partial discharge could take longer as the lender may wish to carry out property valuations.
Here are the most common instances that require you to discharge your mortgage with your lender.
Once you’ve made your final mortgage repayment and the outstanding balance is $0, you will need to go through the formal process of discharging the mortgage and receiving the Certificate of Title registered with the Land Titles office.
When selling a home with a mortgage, you’ll need to discharge it before any settlements are reached.
If you’re selling your home but want to keep your home loan for your next property, you can apply for a substitution of security. This transfers the mortgage from the title of the property you’re selling to the new one you’re purchasing.
When you refinance your home loan, you’re essentially closing one loan and opening an entirely new one. This will require a mortgage discharge as the new lender and mortgage will need to be on the property’s title.
If the bank of mum and dad helped you get into your first home by offering to be a guarantor, you may want to release them from the loan down the line - this will require an internal refinance.
The mortgage discharge process is quite straightforward. Here is the step-by-step process:
The costs involved often depends on the lender you’re with and also the circumstances under which you’re discharging your mortgage.
Some lenders will charge you a discharge or settlement fee when you end the terms of the contract with them. If your home loan was at a fixed rate and you’re paying it out early, you may need to pay break costs.
As a guide, a straightforward/standard mortgage discharge can cost anywhere between $200 to $800. For instance, in Queensland one of the fees that is charged is the ‘release of mortgage’ fee, which is dependent on the number of people involved who are paying the mortgage - $208 for one and $417 if two parties are involved.
If you’re looking to refinance your home loan, loans.com.au offer low rate home loans, and have a simple refinancing process so you can start saving on your home loan repayments sooner. Talk to one of your friendly lending specialists today!GET STARTED
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