If you are selling your house chances are there is still a mortgage on the title. This will need to be removed for your property settlement to go ahead. So, how do you have the mortgage removed?
The first step is to speak to your bank. The bank, as the mortgagee, is responsible for creating the discharge of mortgage. Every bank has a different process and different time frames. You may be required to attend your local branch, print off and fill out a form, or apply for a discharge online.
Once the bank has received your discharge request, they will begin working on two things: The Release of Mortgage and the Payout Figure.
The Release of Mortgage is a Land Registry Document that is handed over to the Buyer at settlement. The Outgoing Bank prepares this document as one of their representatives are required to sign it. When the Buyer lodges the Release of Mortgage at the Titles Office, the Outgoing Bank’s claim over the property is removed.
The Payout Figure is the monetary amount required to pay off your loan balance. This is calculated up to the specified settlement date and incorporates accrued interest since your last mortgage payment. It is important to remember that your bank will include any fees for their work in the payout figure, so it may be a bit higher than you expected.
Additionally, if the Bank does not receive a cheque for the full payout figure, they will not hand over the release of mortgage.
Please also note, your bank does not release their mortgage as soon as your loan is paid off. If you have never applied for a release or if you can’t remember, contact your bank ASAP!