Has the Mortgage been released from your home?

By Pamela Wardle, Legal Practitioner Director

It is very common for people to say that they have “paid off their mortgage” for their home or land when what they really mean to say is that they have paid out their loan.  A Loan Agreement and a Mortgage are two separate documents which have two distinct functions.

A Loan Agreement records the promises made by each party to the loan, ie the lender promises to loan an amount of money to the borrower and the borrower promises to repay that money.  The Loan Agreement also specifies the terms of those promises such as interest rates, repayment amounts, repayment due dates and the period during which the loan must be repaid. 

A mortgage, however, “secures” repayment of the loan by linking the loan to the borrower’s real property.  The mortgage records the borrower’s agreement that if the borrower does not satisfy its obligations under the Loan Agreement, the lender may use or sell the borrower’s property to recoup its money.  A mortgage over a home or land will usually be registered on the title for the land.

It is important to be aware that if you have repaid your loan, the mortgage which is registered over your home or land is not automatically removed or released.  If you wish to have the mortgage released you will need to sign a Discharge Authority with your financial institution and arrange for a Release of Mortgage.  The financial institution will usually send the Release of Mortgage to you to register in the Department of Natural Resources and Mines.  Both the request to have the mortgage released and the registration of the Release of Mortgage usually incur fees which are in addition to your final repayment under your Loan Agreement.

If you have repaid your loan, talk to your financial institution about whether or not you should arrange for the Mortgage to be released form your home or land.