How does my existing mortgage appear on the statement of adjustments when I sell?

When you sell your Ontario home and have an existing mortgage, the mortgage payout does not typically appear on the statement of adjustments as an adjustment item — it appears on your trust ledger as a disbursement that your lawyer pays from your sale proceeds. The statement of adjustments focuses on adjustments between buyer and seller; the mortgage discharge is a separate calculation.

Your mortgage lender will provide a discharge statement showing the exact amount needed to pay off the mortgage as of the closing date. This includes the outstanding principal balance, accrued interest to the closing date, any prepayment penalty, and the discharge fee. Your lawyer requests this statement and uses it to calculate the payout.

On closing day, your lawyer receives the purchase funds from the buyer's lawyer (including the buyer's mortgage proceeds and down payment). From those funds, your lawyer pays your existing mortgage lender the exact discharge amount, pays your real estate commission, pays legal fees and disbursements, accounts for all adjustments, and then sends you the net proceeds. The trust ledger statement you receive after closing will show every deduction, including the mortgage payout, clearly itemized.