Mortgage Discharge in Ontario: Getting Your Mortgage Off Title

You made your last payment, or paid the mortgage out when you sold or refinanced. Now you want to know that the lender's claim is really gone from your property.

A discharge is the step that removes the mortgage from the public record of your property. This article explains the ideas behind it, the costs that can come up when you pay a mortgage off, and how to check that the job is finished.

What a mortgage discharge is

When you borrow against a home, the lender usually registers its mortgage against your property. A discharge is the document and registration that tells the public record the lender no longer has a claim.

A mortgage left on title can slow down a sale or a refinance, even if you owe nothing.

Costs to think about before you pay off

The biggest cost is often not the discharge itself but paying out early. If you break a mortgage contract, the prepayment penalty is usually the higher of 3 months' interest on what you still owe or the interest rate differential. Federally regulated lenders must set out prepayment privileges and penalties in an information box at the start of the mortgage agreement.

There is also a statutory payout right for longer mortgages. Where the term is longer than five years, after five years from the mortgage date you may pay off the principal and interest plus three months' further interest in lieu of notice, and no further interest is chargeable. That right does not apply to a mortgage given by a corporation.

If you are selling and buying, a portable mortgage may let you move your balance, rate and terms to the new home and avoid breaking the contract; whether you can port, and on what conditions, depends on the lender. If the new home costs less than the mortgage amount, you may still pay a prepayment penalty.

Fees and timing for the discharge

Any administrative or discharge fee, and how long the lender takes to prepare and register the discharge, depends on your mortgage contract and on the lender. Your mortgage agreement and the lender's payout statement are the best places to see what applies to you. A lawyer handling a sale or refinance will usually ask for the payout figure and arrange the discharge as part of the closing.

• Read the prepayment and fee terms in your mortgage agreement.
• Ask the lender in writing for a payout statement showing the exact amount to clear the loan.
• Ask what discharge fee, if any, applies and when the discharge will be registered.
• Keep your final payment confirmation and any letters from the lender.

How to confirm the discharge is registered

Do not rely on a paid-in-full letter alone. A letter shows the lender accepts you have paid, but the property record is what future buyers and lenders will see. The usual way to check is to have a lawyer search title for your property and confirm the mortgage no longer appears as an active charge.

If the mortgage is still showing after a reasonable time, contact the lender, quote your payout confirmation, and ask for a date by which the discharge will be registered. If it still is not dealt with, a lawyer can explain the options that fit your facts.

What to do next

If you are behind on payments rather than paid up, different rules apply. Despite any agreement to the contrary, a borrower in default can stop the lender from enforcing the acceleration clause by paying the arrears and the lender's necessary expenses, but not money that is only due later. You can also give the lender written notice requiring a written statement of arrears and expenses, and the lender must answer within 15 days. Once a power of sale has closed, section 22 of the Mortgages Act no longer applies and you are limited to a claim for damages against the lender, so paying the arrears and expenses to stop enforcement is only possible before the sale closes.

• Get a written payout statement before you send money.
• Confirm in writing when and how the discharge will be registered.
• Have a lawyer or your closing lawyer check title once it is registered.
• Keep your discharge confirmation with your property records.

Frequently asked questions