Should you discharge a mortgage when the loan is paid off?

Did you know that even if you've paid off your home loan in full, the security stays on your property
until you request a discharge of the mortgage? If you want the title to be clear, you can, but you’ll need
to instruct a lawyer to officially ask your bank to arrange it.
Monday, 30 September 2019


“We’re often told by our clients that they “don’t have a mortgage” when they ask us to act for them on
the sale of their home. However, many times when we search the title, we find there is a mortgage
registered and we will need to have it discharged on the settlement date,” explains Paula Lines from The
Law Shop. She says the confusion lies in the commonly used terminology.

“A mortgage is a security interest, but we often use that word when talking about the loan. This means
that people who have paid off their loan believe they don’t have a mortgage anymore when in fact, they
don’t have a debt. They do still have the security on their title.”

In most cases, the bank will charge a discharge fee which they would have told you about back when
you first borrowed the money, but Paula says that there’s more to consider.

“For most people, having an undischarged mortgage doesn't make a great difference, as there are no
repayments anymore. You've already paid it off,” she says.

“But in some cases, you are better off leaving the mortgage in place. If you need funds, you can simply
sign a new loan agreement with the bank. You wouldn’t need to again involve your lawyer to register a
new mortgage, as that would take several days and cost you more in the long run. Here at The Law
Shop, we’re more than happy to explain the process.”

Paula and her team specialise in Business, Property, and Personal Law. They offer legal services with a
practical, no-nonsense approach and won’t bore you with confusing legal jargon. Since August 8, The
Law Shop in Tauranga works from a virtual office. The firm’s Rotorua office on Arawa Street remains
open, but their premises on Cameron Rd in Greerton is now closed.

“As virtual lawyers, we may not have an office to host you, but we’re supported by technology. It is
business as usual. The team is always open to adopting change, and we believe that working virtual is
more personal, flexible and efficient than the traditional approach,” Paula says.

“We communicate via phone, Skype, and Messenger and we can meet at a local café. We are also happy
to come to your home or office when required. It’s also a great way to keep our fees competitive. To us,
it all translates into offering even better customer service,” she explains.

If you’d like more information about The Law Shop’s legal services, or if you have any questions or
concerns, give them a call on 0800 LAW SHOP.