Fees & penalties: the discharge of the mortgage fee

ByAndrew Mirams

When you buy a property you receive a Certificate of Title, which is a paper copy of an entry in the online register.

If you have a mortgage, the bank holds the Certificate of Title until your loan is repaid.

A mortgage grants an interest in the real estate to the lender. Once it’s paid in full, either through refinancing or you’ve paid it off, a mortgage discharge must be recorded in the land records.

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You need to be aware if refinancing to a different lender, however, that there may be additional fees to be released from the mortgage early depending on the type of loan, such as a fixed-rate, on the property.

Regardless of how you are paying off the loan, you will probably incur what it called a mortgage discharge fee, which varies from state to state. The charge can also be called a termination or settlement fee.

A recorded mortgage discharge certifies that the mortgage has been satisfied and legally releases the interest of the lender in the property and thereby clears the title.

When there is no longer a debt over the property, you or your legal representative will need to register a discharge of mortgage at the relevant government department.

The online register will be updated and you will receive a new Certificate of Title, which shows that the property has no mortgage on it.

There may also be withdrawal of caveat fees. A caveat is a document that shows any person with a legal interest in a property. After recording, a caveat note appears on the title. In Victoria, you can find out more about withdrawal of caveat fees here. You can also learn more about caveats and discharges of mortgages from the Transfer of Land Act.

According to the Australian Tax Office (ATO), these costs are deductible in the year they are incurred to the extent that you took out the mortgage as security for the repayment of money you borrowed to use to produce assessable income.

Free forms and guides to a mortgage or discharge a mortgage on a property and the fees associated with these transactions are usually available online from the relevant government department.

Depending on which state or territory your property is located, there are different fees to be paid and forms to be completed. Mortgage discharge fees often change from year to year as well, so it pays to keep an eye on the relevant government department’s latest information about it.

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Disclaimer:

The financial industry is a dynamic industry – continually evolving and changing. Whilst every effort has been made to ensure its accuracy, no guarantee is given that the information contained herein is currently correct. To the extent permitted by law, Intuitive Finance accepts no responsibility or liability for any loss or damage what so ever (including direct and indirect) to any person arising from the use or reliance on the information detailed here.

Andrew Mirams
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