Your property will finally become yours once you have completed all your mortgage payments, and while this can take decades, the feeling at the end of the process is well worth the wait.
So, what now?
The first step to take is to discharge your mortgage. You’ll also need to find out about any last outstanding payments that you’re liable to settle. From there, you can start thinking about what to do with the money you had previously been using to pay off your home loan.
In order to help you through this process, we’ll go over all of these points with you.
How Do You Discharge Your Mortgage?
Once you’ve made your final mortgage repayments, it’s time to discharge your mortgage. This means, formally removing the lender from your Certificate of Title to prevent complications if you want to sell the property in the future.
Here is the process to follow if you want to discharge your mortgage:
- Inform your lender that you intend to discharge your mortgage and home loan. You’ll be provided with a Discharge Authority form to enable you to do so. You can generally access the form online, but consider going into the branch so that your lender can assist you if necessary.
- Fill out the form and try to return it as soon as possible. It usually takes around 10 business days to facilitate this process.
- Your lender may offer to register your Discharge of Mortgage on your behalf at the Land Titles Office, or you can do it yourself.
How Much Does it Cost to Discharge Your Mortgage?
Discharge fees generally depend on the lender. Most mainstream lenders charge similar prices. However, non-conforming lenders may charge a little more.
Also note that government discharge fees may apply, and the costs vary from state to state.
Do You Need to Pay Any Other Fees On Your Home Loan?
There are some circumstances where your lender may charge additional fees over and above the discharge costs. For example, if you had a fixed-rate home loan and you paid your mortgage early before the designated date, there may be break costs or penalty interest involved.
Have You Updated Your Homeowners Insurance?
Once you’ve settled your mortgage debt in full, any future insurance claims will then include your name as proprietor, its always good to remove the lender as the Interested party.
Here’s how you can update your homeowners insurance:
- Contact the insurance company to inform them that you’re the sole proprietor .
- Ensure that the only bank account linked to the insurance premiums is yours.
- Cancel any insurance policies and plans that aren’t related to you.
What Should You Do With the Extra Money Every Month?
Since you’ve diligently paid off what’s probably your biggest loan account, it’s a good idea to start paying off any other debts you may have. Whether it’s personal loans, car loans, or credit cards, paying them off sooner than anticipated will save you money in the long run.
It’s best to start with the one that has the largest interest rate first, and then move down the scale and pay each of them off until you’re completely debt-free. If needed, increase the monthly debit orders you’ve set to ensure the money goes where it needs to and doesn’t get spent on other things.
Something to Think About
If you haven’t yet settled your entire home loan account and you still have a small balance, you may want to consider not paying it off entirely.
In the instance that you have an offset account or redraw facility that you have put extra money into over the duration of your home loan, keeping it active allows you access to that money. You can use that money at a lower interest rate than if you had to take out a new loan. You will, however, need to keep track of any annual fees and interest attached to keeping the loan active.
How The Mortgage Agency Can Help
Our professionals at The Mortgage Agency have extensive experience working with home loans and offer sound advice that’s tailored to your financial situation and personal goals. Additionally, we maintain quality relationships with lenders and real estate agents, so we can help you facilitate the process when you’re ready to wrap up your home loan.
The process of discharging your mortgage doesn’t have to be difficult or stressful. We’ll help you through every step of deciding the best way forwards, whether that’s taking out a new home loan to buy an investment property or opening appropriate accounts for saving money.
Once you pay off your mortgage, there are certain steps you must take to wrap up your home loan:
- Approach your lender and complete the paperwork to discharge your mortgage.
- Register at the Land Titles Office, or your lender can do so on your behalf.
- Pay any outstanding fees to your lender.
- Use the money you were putting into your home loan to make extra payments on any other outstanding loans or credit cards you may have, meaning you’ll be debt-free sooner.
If you need any assistance along the way, contact The Mortgage Agency for a consultation and we’ll help you achieve your financial goals.
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.