Key takeaways for sellers
- Act early. Lodge your discharge authority with your lender as soon as you list or go under contract; processing commonly takes a couple of weeks and varies by lender, so a slow discharge is a frequent cause of delayed settlement.
- A $0 balance isn't a clear title. Even if your loan reads zero, your lender stays registered on your title until a discharge is formally registered at settlement.
- It's handled digitally. In VIC, NSW and QLD your conveyancer and lender coordinate the discharge in the electronic settlement (PEXA) workspace, and the payout comes out of your sale proceeds at settlement.
What "discharging a mortgage" actually means
When you sell, the buyer is entitled to receive the property with clear title, free of your home loan. Discharging your mortgage is the formal process of paying your lender out of the sale proceeds and removing its registered mortgage from the title, so ownership can transfer to the buyer unencumbered. Until the discharge is arranged, settlement cannot complete.
How the process works
- Lodge a discharge authority. You tell your lender in writing that you're selling and authorise it to discharge the mortgage. Most lenders have a specific discharge or loan-payout form.
- The lender prepares a payout figure. It calculates the exact amount owing as at the settlement date, including interest to that day and any break costs on a fixed loan.
- Settlement pays the lender first. On the day, the buyer's funds pay out your loan before you receive the balance. Your conveyancer or solicitor coordinates this with the lender inside the electronic settlement (PEXA) workspace.
- The mortgage is removed from title. The lender lodges a discharge so its mortgage is released and the title can transfer to the buyer. This is registered with your state's land titles registry — NSW Land Registry Services in NSW, Land Use Victoria in VIC, and Titles Queensland in QLD.
Do I need to discharge my mortgage if my balance is $0?
Yes. A zero loan balance is not the same as a released title. Your lender remains registered as a mortgagee over your Certificate of Title at the state land registry until a formal discharge of mortgage is lodged and registered — which happens at settlement. Settlement cannot complete until that release is in place, so you still need to request the discharge even if you've paid the loan down to nothing.
Start early — the most common cause of delay
Processing a discharge commonly takes a couple of weeks, and the timeframe varies by lender. Because settlement dates are fixed in the contract, a slow discharge is one of the most frequent reasons a seller's settlement is delayed, which can expose you to penalty interest. Lodge your discharge authority as soon as the contract is signed, not in the final week; you don't need to wait for the buyer's finance to be unconditional.
Fees and costs to expect
Discharge costs are made up of a few separate items. The exact amounts vary by lender and state, so confirm the current figures for your lender and your state — your conveyancer will set them out for you before settlement.
| Fee | Paid to | What it's for |
|---|---|---|
| Lender discharge / admin fee | Your lender | Processing the discharge and preparing the release |
| Land registry fee | State land registry | Registering the removal of the mortgage from title |
| Electronic settlement (PEXA) fee | PEXA | Secure electronic settlement and funds transfer |
| Fixed-loan break cost | Your lender | Only if you exit a fixed-rate loan early |
Selling and buying at the same time?
If you're buying your next home at the same time as selling, you may not need a full discharge. Some lenders offer a substitution of security (sometimes called loan portability), which transfers your existing loan from the property you're selling to the one you're buying, rather than discharging and re-establishing it. Whether it's available depends on your lender and your circumstances, so ask your lender if you want to explore it.
If you own outright
If there's no loan over the property, there's no mortgage to discharge, but there may still be other interests to clear, such as a caveat or a second mortgage. Your conveyancer checks the title early so nothing surfaces at the last minute.
How a conveyancer handles your discharge
Your conveyancer coordinates the discharge with your lender and the buyer's representative inside PEXA, and makes sure the payout figure and the title release line up on settlement day, so your loan is cleared and clear title passes to the buyer without holding settlement up. Zettle manages this for sellers on a fixed fee. Get a fixed-fee quote before you list.
General information for residential sellers in VIC, NSW and QLD, not legal or financial advice. Confirm the details for your loan and state.
