If you have, you are one of the lucky ones living the Australian dream! Kudos to you by the way! However most people are not aware that once you pay out your loan to the bank, your bank will not automatically remove their mortgage from your title and the mortgage will remain noted on your title for years to come!
In order to remove the mortgage from your title, you’ll need to get from your bank a “Form 3 – Release of Mortgage”. You’ll then need to lodge this with the titles office and pay a lodgement fee (formally named “the Department of Natural Resources and Mines”). Once the titles office has processed the lodgement, you will receive what is called a “Registration Confirmation Statement” which will show your amended title of your property with no mortgage listed on it.
Often when a loan gets paid out in full, the bank will send you this Form 3 Release. Most people don’t actually realise the importance or significance of this piece of paper and just file it away with the rest of their bank statements. Due to this practice, it often gets misplaced.
You won’t realise that this document has gone missing until you go to sell your property in the future. Your solicitor will contact you once they have received the signed contract of sale to advise you have a mortgage registered over the property and need to get this released. This is often met with a confused client confirming “but I’ve paid off my mortgage years ago!”.
Because the Form 3 hasn’t been lodged with the titles office, there is no proof that the mortgage has been paid off. You can request another Form 3 Release be prepared by your bank, however, be wary that your bank may charge a processing fee (of anywhere up to $400.00), not to mention the proposed settlement date for your contract may need to be delayed due to needing extra time to get this document from your bank, which a delay to settlement can give the buyer a right to terminate the contract if they want to get out of the contract for any reason.
So if you have paid off your mortgage, whether it was years ago or just recently, you need to check that you have lodged the Form 3 – Release of Mortgage from your bank. If you would like assistance in ensuring that the mortgage has been removed from your title, please contact one of our friendly conveyancing team that can assist you further.
If the mortgage hasn’t yet been removed from the title, we can liaise with your bank and obtain the necessary Form 3 Release on your behalf and lodge this for you with the Titles Office.