Congratulations on buying or selling your home. Next step: discharge of mortgages in the Ontario land registry.
Banks, mortgage lenders or creditors use property as collateral for mortgages or to finance renovations with a home equity line of credit (HELOC) linked to your mortgage. Those mortgages on property titles delay property sales because you can't legally transfer property to new owners until mortgages are discharged.
Mortgage loans secured by property give lenders the legal right to prevent you from buying, selling or refinancing your home. Like any debt owed creditors, you must pay mortgages in full or transfer portable mortgages to prevent your lender from taking your home when you move on. Unless you arrange an assumable mortgage when you sell your home, discharging mortgages is a legal necessity.
Missing this important step ties up property sales or purchases in needless delays.
Discharge Your Mortgage the Easy Way
Axess Law has Ontario real estate lawyers near you who can close real estate transactions by checking property titles for mortgages or property liens. Only a lawyer licensed by the Law Society of Ontario can discharge mortgages in Ontario. Our Greater Toronto Area real estate lawyers are notary publics and can discharge mortgages at Ontario land registry offices quickly and with a minimum of fuss or expense. Our flat fee rates start at $799.99 to close real estate sales or $999.99 and up for all the legal paperwork required to buy real estate in Greater Toronto.
So, how much to discharge a mortgage? Toronto area lenders typically charge mortgage discharge fees of $250 to $400 on top of our fees. You can find these penalties in your mortgage documents. Lenders are required to disclose all fees when you sign mortgage loans.
Paying Mortgage Penalties
Most mortgage lenders have prepayment charges for variable rate mortgages of about three months' interest. You may pay much more for fixed rate mortgage penalties if your lender charges interest rate differentials (IRD). For example, if interest rates when you bought your home were higher than current rates are or you got a discounted rate when you signed your mortgage, you could be charged an IRD.
You can ask us or your lender if you have any questions about prepayment charges. We make sure prepayment penalties are paid and home equity line of credits closed so your mortgage is properly and legally discharged. We put it in writing so there is no doubt your mortgage is discharged.
Documents We Need
Email or bring the following documents with you when you meet with your Axess Law real estate lawyer. If preferred, we can request mortgage documents from lenders for you. We will need originals or certified true copies of:
- mortgage loan agreements
- payoff amounts showing mortgage balances, expiration dates and per diems (daily interest rates)
- the amount of any home equity line of credit owed.
Tell us if you have construction liens or other debts on property you own. Liens affect whether you can transfer the title to others.
We complete discharge of mortgage documents for your lender and file the updated documents with the Ontario land registry. You get a permanent record to keep in case questions about the legal title arise later.
Do I Need a Lawyer?
You could do some of the work of discharging your mortgage yourself, like taking documents to a local land registry to be recorded. Why use up precious time with land transactions an Axess Law real estate lawyer can complete in a few easy steps, for an affordable flat rate fee? We can complete most mortgage discharges in under a week.
Homeowners often ask us why they have to pay mortgage discharge fees or what to do if they disagree with mortgage prepayment penalties or interest differential rates. Most mortgage lenders charge administrative fees to discharge mortgages and they must clearly and simply state both their fees and prepayment penalties in mortgage documents. You can contact the Ontario Ombudsman for Banking Services and Investments if you have already complained directly to your lender and still have serious concerns about prepayment penalties a mortgage lender is charging.
Getting a New Mortgage
Axess Law has qualified real estate lawyers near you and can meet via online video call anywhere in Ontario to review mortgage documents for new mortgage loans. We prepare legal documents to refinance mortgage loans if you break mortgage contracts to take advantage of lower interest rates. Since changing lenders requires you to update title to the property. your Axess Law lawyer will discharge existing mortgages and add new lenders to the title. Mortgage lenders may even pay your legal fees when you change lenders. Ask your lender if they will cover assignment fees and mortgage discharge costs.
Remember, updating your title to the home when you buy or sell real estate is a legal necessity. If your title has liens for debts you have long since paid off, new buyers will be unable to register legal title in their name.
Frequently Asked Questions
Do I have to discharge a second mortgage?
Second mortgages must be discharged on the title before you sell or buy real estate in Ontario. Check with your mortgage lender about transferring second mortgages to new properties when you sell.
What if I still owe money after I sell?
You may still owe money on property you own after a buyer makes an offer. Mortgage lenders have a legal right to hold your property as collateral unless you discharge mortgage debts in full. Provided you have other income or investments, you could make up the difference yourself. If your credit is good or you buy new property that is undervalued, you may be able to get a line of credit to pay outstanding mortgages.
Do I have to discharge our mortgage if my spouse dies?
Married spouses usually have survivorship rights for matrimonial homes. Some common law couples are also joint tenants on title and co-borrowers on mortgages. Being joint tenant means you have survivorship rights when a spouse dies and need only request that Axess Law prepare a survivorship application and amend the title to formally remove your spouse's name. If your home is mortgaged, you are liable for the mortgage debt. Most lenders recommend mortgage life insurance to pay out the mortgage if you, your spouse or both of you die while your home is mortgaged.