Discharge of mortgage: what it means and how it works in Australia
Learn what a discharge of mortgage is, when it’s required, how the process works in Australia, typical fees, timelines, and key steps for selling, refinancing or repaying your home loan.
A discharge of mortgage is the formal legal process of removing a lender’s claim from a property title once a home loan has been repaid. Paying off the loan itself does not automatically clear the lender’s interest from the title, a separate discharge process must be completed.
Until the discharge is registered with the relevant state land titles office, the lender’s mortgage stays on the title. This can affect a property owner’s ability to sell or refinance the property in the future.
What is a discharge of mortgage?
A discharge of mortgage is a legal dealing that removes a registered mortgage from a property title. It is lodged with the state or territory land titles office usually by the lender, after the home loan has been repaid in full or the property is sold. It is also lodged when the loan is refinanced with a new lender.
The difference between repaying a loan and discharging the mortgage matters. Repayment settles the financial debt. Discharge removes the lender’s legal interest from the property title.
Both steps are required to establish clear ownership, free of any lender claim.
When is a discharge of mortgage required?
A discharge of mortgage is needed in three main situations: selling a property, refinancing with a new lender, or repaying the loan in full.
Selling a property
When a property is sold, the outstanding mortgage must be discharged as part of the settlement process. The proceeds from the sale are used to repay the outstanding loan balance. The lender then arranges for the mortgage to be removed from the title before ownership transfers to the buyer.
Refinancing with a new lender
When a borrower refinances to a different lender, the existing mortgage must be discharged before the new lender can register their interest against the title. The new lender generally manages this process as part of the settlement for the incoming loan.
Repaying the loan in full
When a borrower pays off a home loan without selling the property, they must still actively request a discharge. The mortgage will not be removed from the title automatically. The borrower must submit a discharge authority form to the lender to start the process.
What does the discharge of mortgage process involve?
The discharge process follows four steps:
- The borrower submits a discharge authority form.
- The lender prepares documents.
- The documents are lodged with the land titles office.
- The mortgage is then removed from the title.
The borrower submits a discharge authority form to the lender. This form includes details of every borrower and guarantor listed on the loan, the loan account number, and bank account details for fee payment. If refinancing, it also includes the name of the incoming lender.
The lender prepares the discharge documents and works with the relevant state land titles office. It may also use an electronic conveyancing platform such as PEXA (Property Exchange Australia). PEXA handles the lodgement of discharge documents electronically, which has reduced processing times compared with paper-based methods.
Once lodged, the land titles office registers the discharge. The lender’s interest is then removed from the title.
The timeline depends on your circumstances. Some lenders may take longer, with the discharge process taking up to 10–21 days from submission to completion.
What documents are needed to discharge a mortgage?
To start a discharge, borrowers need to provide the following information on a discharge authority form:
- Borrower details. Details of every borrower listed on the loan, including any guarantors, must be provided on the form.
- Loan account number. The home loan account number identifies the loan being discharged.
- Bank account details. Bank account details are needed for payment of the discharge fee.
- New lender name. The name of the incoming lender must be provided if refinancing.
- Legal representative. The name of a legal representative must be provided if applicable.
- Contract of sale. A copy of the contract of sale must be provided if selling the property.
Some lenders need wet signatures (physical signatures in pen) from all parties. Borrowers can check their lender’s specific requirements before submitting.
What does a discharge of mortgage cost?
The total cost of discharging a mortgage has two parts: the lender’s discharge fee and the state or territory government registration fee.
Refinancing a home loan in Australia costs between $500 and $2,000 in total, across all associated fees. The discharge fee is one part of that total.
Lender discharge fees
Lender discharge fees typically range from $150-500.
State and territory government registration fees
Government registration fees are charged separately from the lender’s fee. They are paid to the relevant state or territory land titles office to register the discharge.
We do our best to keep this information up to date, as these fees are subject to change. We recommend checking with the relevant state or territory government body to confirm the current fee. If you choose to settle with Unloan, the current fee at time of the settlement will apply.
Other costs when refinancing
When refinancing, the discharge fee is one of several costs.
What are break costs and how do they differ from discharge fees?
Break costs and discharge fees are two separate charges that are sometimes confused.
A discharge fee is a standard administrative charge for removing the mortgage from the property title. It applies to all home loan types, variables, and fixed rate when the mortgage is discharged.
Break costs apply only when a fixed-rate loan is ended before the fixed term expires. Break costs compensate the lender for the financial loss from the early termination of the fixed-rate agreement. They are worked out based on the difference between the original fixed rate and current market rates, along with the remaining loan balance.
For variable rate home loans, there is no break cost when the loan is repaid early or discharged, only the standard discharge fee applies.
What is a partial discharge of mortgage?
A partial discharge releases part of a mortgaged property from the lender’s security interest, while the mortgage over the remaining property continues. This occurs in situations such as property subdivision, where part of a larger parcel is sold. It also applies when a borrower wants to remove one property from a multi-property security arrangement.
The documentation needed for a partial discharge is more detailed than for a full discharge. The portion of land being released must be clearly identified by the lender. The lender must also confirm that the remaining security is enough to support the outstanding loan balance.
A note on ASIC and discharge of mortgage involving deregistered companies
If a company connected to a property or loan has been deregistered, the discharge process may be more complex. You may need to check ASIC requirements and seek professional legal or conveyancing advice before taking the next step.
What happens if a mortgage is not discharged?
If a mortgage is not formally discharged after the loan is repaid, the lender’s interest stays registered on the property title. This means the mortgage can remain recorded on the title even after the debt has been settled.
This can stop the property owner from selling or refinancing without first resolving the outstanding registration. The issue may not surface until years later, when the owner tries a new property transaction. Corrective action must then be taken through the lender, or through legal channels if the lender no longer exists.
Borrowers can confirm the discharge has been registered with the land titles office after completing full repayment, rather than assume it has been handled.
Frequently asked questions
Does paying off a home loan automatically discharge the mortgage?
Paying off a home loan does not automatically discharge the mortgage from the property title. The financial debt is settled, but the lender’s registered interest stays on the title until a formal discharge is lodged with the land titles office. Borrowers must actively request a discharge by submitting a discharge authority form to their lender.
How long does a discharge of mortgage take?
A discharge of mortgage can take up to 10–21 days from submission of the discharge request to completion.
What is the average cost to discharge a mortgage in Australia?
Discharge/exit fees can range from $150 to $500 across lenders. State and territory government registration fees can add between $130 to $250. The combined total varies by state and lender.
Can all parties to the loan sign the discharge authority electronically?
Electronic signatures are not accepted by all lenders. Borrowers can check their lender’s requirements before submitting the form.
What is the difference between a discharge fee and a break cost?
A discharge fee is a standard administrative charge for removing a mortgage from the title. A discharge fee applies to all loan types when the mortgage is discharged. A break cost applies only to fixed-rate loans when the fixed term is ended early.
A break cost compensates the lender for the financial loss from early termination and is worked out separately from the discharge fee. Both may apply when exiting a fixed-rate loan before the end of the fixed period.
Does a discharge of mortgage affect a property sale settlement?
The discharge of mortgage is coordinated as part of the settlement process when a property is sold. The outstanding loan balance is paid from the sale proceeds, and the mortgage is removed from the title before ownership transfers to the buyer. Starting the discharge request well before the settlement date reduces the risk of delays.
About Unloan
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Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. If you currently have an Unloan home loan with an active Lender’s Mortgage Insurance (LMI) policy the maximum amount you can borrow across all Unloan loans is $3,000,000. Please note Unloan currently doesn’t offer loans with an LMI premium. In some cases, depending on the property’s location or type, we may only be able to lend you up to 70% of the property’s value.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Unloan is a division of Commonwealth Bank of Australia, and Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. If you currently have an Unloan home loan with an active Lender’s Mortgage Insurance (LMI) policy the maximum amount you can borrow across all Unloan loans is $3,000,000. Please note Unloan currently doesn’t offer loans with an LMI premium. In some cases, depending on the property’s location or type, we may only be able to lend you up to 70% of the property’s value.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
