Definition of Discharge of Mortgage

When a borrower has repaid their mortgage loan in full, they will receive a document signed by the lender to notify them that the loan payments have been completed. This document and the completion of the repayment of the mortgage is known as a discharge of the mortgage.

Why is this term important?

Typically, when you discharge a mortgage, there will be a fee. This fee is paid by the borrower to the lender and it’s in addition to the final loan payment on the mortgage loan.

When a borrower first negotiates a mortgage, the lender places a lien on the property. This lien remains in place until the loan is paid in full. All mortgage loans have liens against the property, as security in case of default by the borrower. To remove this lien administrative charges must be paid. On average, these administration fees sit around $250, but this amount change from province to province and from lender to lender.

Keep in mind that discharging a mortgage does not only occur when you make your final loan payment. Another way to discharge a mortgage is by refinancing or renewing your loan with a new lender. If you refinance or renew with a new lender, you will still have to pay the administration fees for the removal of the old lien. From there, you can sign on to a new mortgage which would mean you are discharged from further payments on the old mortgage loan.

Examples of term

Here are sample documents from Ontario and Alberta of discharge documents.