A discharge of mortgage is the formal release of a lender's registered security interest over a property. When a loan is repaid, either at maturity or on early exit, the lender lodges a discharge document with the relevant state Land Titles Office. Once registered, the mortgage is removed from title. The borrower then holds the property unencumbered, or, on a refinance, with the replacement mortgage in place.
Discharge on a sale: the conveyancing solicitor requests the lender's payout figure, the amount needed to discharge the mortgage including interest calculated to the proposed settlement date. The settlement agent coordinates simultaneous payment of the payout figure to the outgoing lender and registration of the transfer to the buyer.
Discharge on a refinance: the incoming lender funds the outgoing lender's payout figure at settlement. Discharge of the first mortgage and registration of the replacement mortgage happen simultaneously at the Land Titles Office.
Discharge timing varies by lender. Major banks typically discharge within 10-15 business days of receiving a signed discharge authority. Private lenders and tier-two non-banks typically move in 5-10 business days. On files with a second mortgage, slow discharge by the senior lender can create problems for the subordinated lender, whose recovery depends on the senior's payout figure arriving in time for simultaneous settlement.
Discharge costs in Australia include a Land Titles Office lodgement fee (varies by state) plus the lender's own discharge fee, typically $150-$350 at major banks and varying at non-bank lenders. These are separate from break costs, which apply on fixed-rate loans discharged before the fixed period ends.