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Done with your home loan? How to discharge your mortgage and what it means

Family celebrating paying off their home loan and discharging their mortgage by their house.

Home loans end for a variety of reasons, so it's important to know what to do when time is up. 

Your lender's name is on your Certificate of Title (i.e. the deed to your home) until the mortgage is fully repaid, refinanced, or sold to a new owner. Therefore, a mortgage discharge is the process of removing a home loan from the title of your property.

A mortgage discharge is different from foreclosure (the lender seizes control of the property) and settlement (you officially agree to pay back your home loan). 

So what happens during a mortgage discharge? Are there costs involved? And what's the process? Let's break down what happens when your home loan ends.

When to get a mortgage discharge

Family sheltering under discharge mortgage fake house.

A mortgage discharge is required in a variety of home buying situations. Below are some of the most common reasons for discharging a mortgage.

You’ve paid your home loan in full

Once you've paid off the outstanding balance on your mortgage, you’ll have to go through the process of discharging the mortgage and getting the certificate of title registered with the land titles office.

You’re selling your home

When selling a home with a mortgage, you’ll need to get a mortgage discharge before any settlements are reached. This removes your lender's name (and your own) from the title of property so the new owner can register their own.

If you want to move your current home loan to your next property you can apply for a substitution of security, which transfers the mortgage from the title of the property you’re selling to your new one.

You’re refinancing with a different home loan lender

Refinancing your home loan will also require you to discharge your current mortgage, as the new lender and mortgage will need to be on your property’s title. This is sometimes called a "partial discharge" since you'll still have outstanding debt against the property.

How do I discharge a mortgage?

Discharge of mortgage process flow chart infographic

Discharging your mortgage isn’t complicated in practice, it'll just take a bit of planning and paperwork. Here is the basic process of how to discharge your mortgage. 

Step 1: Get your paperwork ready

An ounce of preparation, hey? To discharge your mortgage, you'll need the following information or home loan documents on hand:

  • Legal names of everyone on your home loan, such as your partner or guarantor.
  • Your property details, including certificate of title and address. 
  • Your home loan account number(s), including offset accounts or redraw facilities.
  • A way to pay discharge fees, such as a credit card.
  • Contact details for your mortgage broker, conveyancer, or other financial institutions that helped you take out the initial home loan (such as first home buyers grants). 
  • Your outstanding loan amount and loan-to-value ratio (LVR) or home equity, if you're refinancing. 

Those selling their properties may also need the contract of sale. 

Step 2: Notify your lender

Let your current home loan lender know you plan to discharge the mortgage. Typically, lenders will ask you to complete a discharge authority form, which should be available on their website.

A discharge authority form tells your home loan lender to start the mortgage discharge process and release the security of your home loan back to you. 

Now is a good time to ask questions, too, like what discharge fees apply and how long the discharge process will take. Typically, the process takes 10 - 15 business days.

Step 3: Complete and return the Discharge Authority form

Be sure to properly fill out the form and lodge it with the right department in a timely manner. Now is the time to pay any break costs or discharge fees, too. 

Step 4: Register your discharge and Certificate of Title

After submitting your discharge authority form, your lender will review it. It everything looks correct, they will prepare a discharge mortgage document. 

The discharge mortgage document must be registered with your state land title office. Usually the lender sends it for you — if they don't, you have to do it. 

Once the land titles office approves the mortgage discharge, your home loan will get scrubbed from the title of your property. Now you can refinance, sell, or enjoy the home you officially own.

How much does a mortgage discharge cost?

The cost of discharging your mortgage depends on your home loan lender. Some lenders charge a discharge or settlement fee when you end the terms of contract with them, usually between $100 - $300. Others will have no ending fees at all.

While it's a relatively minor cost next to mortgage repayments or stamp duty, discharge fees are still worthwhile to consider when comparing home loans. You can find what fees apply to a mortgage by looking at the product disclosure statement (PDS) and target market determinations (TMD).

If you’re discharging from a home loan with a fixed rate and your fixed term hasn't ended yet, there is a chance you’ll need to pay a break cost for terminating the contract before the agreed upon time.

This fixed rate break cost can be significant, so it's worthwhile looking at this fee ahead of time before your fix your home loan interest rate at all. 

Ready to refinance your home loan? Compare options in the table below.

Compare refinance home loans - last updated 28 May 2024

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Maria Gil
Maria Gil
Money writer

Maria has five years of journalism experience and is currently a finance journalist covering home loans and property, personal finance and the currency exchange market. She has also completed her ASIC RG146 (Tier 2).

Evlin DuBose
Evlin DuBose
RG146
Senior Money Writer

Evlin, RG146 Generic Knowledge certified and a UTS Communications graduate, is a leading voice in finance news. As Mozo's go-to writer for RBA and interest rates, her work regularly features in Google's Top Stories and major publications like News.com.au.

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