# Mortgage discharge fees



## gardner

My mortgage with TD has been paid off for several months now. Four times now they have sent me a form letter telling me that they want $70 or so to de-register the mortgage with the land office and an additional $260 "discharge fee" for who-knows-what. So far it seems cheaper to just let them twist in the wind for their $330.

Is there any rush to pay them off?

Anyone tried to negotiate down the bank's discharge fee? If the land office has to be paid $70, I'm okay with that, but I see no reason the bank should get $260 for nothing.


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## Addy

Get out your mortgage document and read it. I read a while ago about a lady who was charged $260 for a discharge fee, was told (by the bank) to re-read her mortgage contract, which she did. She found out the discharge fee was supposed to be $200, not $260. So she received a refund of $60 from the bank. I'm sure the discharge fee would be listed on your mortgage contract. Let us know what you find out.


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## Jon_Snow

Yeah, there is was a fair bit of irritation on our part when we ponied up the discharge fee. But the fact we had just paid off our mortgage and were completely debt free made it all easier to stomach. I'll never give TD, or any other bank, the opportunity to charge me for these things again - if we buy again, it will be with cash.


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## Ihatetaxes

I paid zero fees with RBC when I paid my mortgage off 3 years ago.


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## carverman

I had to pay CIBC a fee to discharge my mortage about 10 years ago. I don't remember exactly how much it was but it was significant. There is a fee for the land registry office to discharge the charged mortgage on the property.
There is also some legal fees involved as most banks have to go through a lawyer for the discharge process.
*TD mortgage customers in Ottawa can expect to pay $260 discharge fee, plus a $70.50 e- registrations fee. *

It is in your best interest to pay the discharge fees ASAP, because the bank technically *still has a mortgage on your property, even if you are not paying monthly mortgage payments* anymore. 
Also, the fire insurance company still has the mortgage company on it's file until the mortgage is discharged and the discharge papers are sent to you from the mortgage company. 
Normally, if you have a mortgage and a fire occurs, the mortgage company will may be involved somewhat, because they are still listed as the mortgage company.



> Lenders want to have their financial interests protected by the insurance policy, but the policy is a contract between the insurer and the insured, who is typically not the lender. To offer the lender protection without taking away the insured's control of the policy, many policies contain a mortgagee clause that protects a lender's financial interest in the home in the event of a loss. In other words, this clause offers the mortgagee rights under the policy even though it is not a named insured.


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## liquidfinance

That's quite disgusting that the banks charge for you to be released after paying your mortgage. As if they haven't had enough money from you already.


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## OptsyEagle

This fee is designed to pay the cost for the bank to go to the land registry office and do a full discharge of the lean on the property. 

Most banks will add it to the final monthly payment or the balloon payoff payment and many customers may not even notice it was paid. I suppose other banks add the cost of this service to the overall loan. I doubt it costs them anywhere near $260 to discharge a mortgage, but it would cost them something.

To the OP. If the discharge is not paid, no one will ever be able to loan you money, against the house, or buy your house. Do you want to own it or do you want the bank in the middle of your ownership. They have you by the short and curly's, as always. Pay the fee and get rid of the mortgage.


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## heyjude

I recently paid off a mortgage at ING. The fee was $60. Shortly thereafter I received the mortgage discharge document, confirming that ING had registered the discharge at the land titles office. They also mentioned that I should let my insurance company know. 

$60 seems to me a perfectly reasonable fee for this. $260 is a bit much, but, as others have said, you definitely want to complete this process. The fee may be listed in your contract, or it may refer you to a list of current TD fees, which must be listed on their website somewhere.

Edited to add: here's what I found when I put "mortgage discharge fee" in the Search box:

http://www.td.com/to-our-customers/tdhelps/#psce|cid=871|lid=1|tid=001|vid=d02f27a0c


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## carverman

heyjude said:


> $60 seems to me a perfectly reasonable fee for this. $260 is a bit much, but, as others have said, you definitely want to complete this process. The fee may be listed in your contract, or it may refer you to a list of current TD fees, which must be listed on their website somewhere.


Banks that are mortgage companies use law firms to file and discharge the mortgage. Lawyers charge for this service, so I doubt that the bank is the one that is doing the gouging. BTW, it also costs to "charge the mortgage" on
the property, but this is usually handled by the closing lawyer at the time of the sale who acts on your behalf and the mortgage company's behalf and this is included in the closing cost report to you. 

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2008/03/discharge-fees.html


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## CanadianCapitalist

I would recommend paying the fee and discharging the mortgage. In addition to what OptsyEagle said, if you own your home free and clear, many insurers will offer a discount on your home insurance. So, that will offset your cost a little bit.


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## Taraz

liquidfinance said:


> That's quite disgusting that the banks charge for you to be released after paying your mortgage. As if they haven't had enough money from you already.


If you think that's bad, look at the early payoff fees banks charge to payoff your mortgage before the term is up. Many companies charge tens of thousands of dollars. You're almost better off just to continue to pay it until the end of the term (and then pay it off) in some cases.


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## carverman

CanadianCapitalist said:


> I would recommend paying the fee and discharging the mortgage. In addition to what OptsyEagle said, if you own your home free and clear*, many insurers will offer a discount on your home insurance.* So, that will offset your cost a little bit.


Good news if that is true, but I have not experienced any discount on my yearly premiums after my mortgage discharge and advising my broker in writing of the fact. 

After 18 years with the same insurance broker, the underwriter they selected for my home insurance just sent me another renewal with a 18% increase on my homeowner insurance, citing they had no
choice but to increase my premiums because of the Alberta floods last year ..yada..yada. They did that last year (no Alberta floods in 2012) and the same in the previous years. 

Needless to say, being claims free for 18 years, I'm not too happy about it and now getting on-line quotes from a 4 or 5 insurance providers.

Most of the time the premium is based on things like building construction/age/roof/plumbing/squarefootage/rebuild costs, how close to a fire hydrant/fire hall, 
smoke detectors or monitored security system etc.

Of course if you insure both home and auto, you do get a better discount if they get more business..and some do offer a tiny discount if you belong a professional affiliation or alumni.

I belong to an alumni, and that worked in my favour..at least up to now..but now they are in the gouging mode. The Ontario gov't just adds to your high premium discontent by adding
another 8% sales tax on top of that.


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## carverman

Taraz said:


> If you think that's bad, look at the early payoff fees banks charge to payoff your mortgage before the term is up. Many companies charge tens of thousands of dollars. You're almost better off just to continue to pay it until the end of the term (and then pay it off) in some cases.


Depends on the mortgage. I had a variable rate mortgage with no early payoff penalty on my CIBC mortgage in 2003 when I retired.
My penalty came in the form of added income tax on the RRSP lump sum added to my taxable income, when I collapsed one of my RRSPs to come up with the lump sum to pay it off..
but in retrospect it was still cheaper than continuing to pay the mortgage for another 8 years at the time. 
Of course back then, I was expecting my Nortel DB pension to continue and not be decreased by 33%, and in the process of windup. But even with that,
I still saved a few thousand by not having to pay a mortgage for the balance of the 5 year term ( 3 years left at the time) in retirement.


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## lb71

Could you not convert the mortgage into a home equity line of credit? You would then avoid the discharge fee, and have a cheaper source of credit available if you ever needed it. (And you don't even need to use it.)

I had a friend years back who never bothered discharging his mortgage. He said it offered an extra level of protection against title theft.


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## gardner

lb71 said:


> home equity line of credit


I have considered having an HELOC, but at the moment, I flat-out don't need one. My crystal ball is not perfect, but I don't anticipate needing one in the future.

Agreed: a possible reason to leave the mortgage registered is that it is a barrier to having a mortgage fraud perpetrated against the property.


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## marina628

We paid our home off in but we did not discharge the mortgage as we have title insurance and since TD has the lien on the house if we ever wanted to get funds it would be easy to do .I am not convinced you get a break on insurance if no lien on the property .


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## nobleea

Does keeping the mortgage registered on the property act a bit like title insurance? In that very few lenders would take 2nd position on a property if someone illegally tried to pull a new mortgage on your paid off house and run away with the money?


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## MRT

If you have title insurance, it is not tied to the mortgage and remains in effect as long as you own your home, AFAIK. So you could discharge the TD mortgage and still be covered by the policy.

Some insurers do offer a discount for a 'free and clear' home, but I have no idea how common that is. I have personally encountered clients complaining after a HELOC was registered and their insurer removed a discount from their policy (they claimed they didn't know that a secured line of credit was a charge and registered on title...not sure what they thought SECURED means, lol)

Keeping a mortgage registered could help avoid fraud, but it does not prevent it. A mortgage from 10-20 years ago has obviously been paid down a great deal (refinances entail a new registration), and the home has appreciated in value...so a 2nd mortgage is easy enough to register once you determine rough market value. Fraudsters may target a F&C home because there is more equity to use for the fraud and there will perhaps be less scrutiny of the fraudulent transaction by the duped mortgagee (e.g. 500k F&C home, 200k 'fraud' mortgage = bank may not bother with a physical appraisal).

Personally, I would simply have a HELOC setup or a register a private interest-free mortgage in favour of a family member that was for the full value of the home and stated that no repayment is required until the home is sold. Fraudsters can then do what they want because, in the event of a claim by the 2nd mortgagee, there will be nothing left to payout after the family member is "repaid". You can even ask your bank to put a hold on a HELOC if you won't be using it regularly, to prevent fraudulent use of the account, if you are extra paranoid.

Having said that, I would run any idea by a real estate lawyer before acting.

As for being surprised by discharge fees - the fees are in your documents - they should be recited in your Mortgage Commitment, your Cost of Borrowing Disclosure, and probably in the Standard Charge Terms as well, but most definitely in the COB disclosure. 

Thus, banks have virtually zero motivation to waive it, unless you have some other leverage, like you are refinancing with them or porting your mortgage to a new property. There is a lot of back-office work that goes into administering a mortgage from the time it is written to the time it is discharged (and after, in some cases!) - most of us would call that the 'cost of doing business', but not the banks!


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## birdman

Taraz said:


> If you think that's bad, look at the early payoff fees banks charge to payoff your mortgage before the term is up. Many companies charge tens of thousands of dollars. You're almost better off just to continue to pay it until the end of the term (and then pay it off) in some cases.


Early payout fees for the most part normally apply to fixed rate and term mortgages and often refers to the interest rate differential as the penalty. Remember that if the Bank is say paying 3% for a 5 year term deposit and loans it out for 5 yrs as a locked in mortgage at say 4% they earn the spread of 1%. This is the financial margin. Then, lets presume interest rates go down by 1.5% and they let you pay out your mortgage without penalty - what happens? The bank is left with a liability (the locked in term deposit on which they are paying 3%) but no mortgage and if they re-lend the money out they will only get the new rate of 2.5% and go backwards by .50 %. This whole subject of "asset-liability management" is very complex and difficult to explain her but hopefully the foregoing will shed some light on the reason for the larger interest rate penalties.


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## CanadianCapitalist

carverman said:


> Good news if that is true, but I have not experienced any discount on my yearly premiums after my mortgage discharge and advising my broker in writing of the fact.


Just checked two insurers at random we've purchased policies from in the past. Both offer mortgage-free discounts. Sure not all insurers may offer a discount but many do.

http://www.cooperators.ca/en/Insurance/home/home-insurance-basics/save-on-insurance.aspx

http://www.belairdirect.com/en/home/save-home-insurance.html


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## marina628

When we paid ours off in January the lady at our bank said the title insurance is tied to the mortgage so if we discharged it ,it would stop.I know that was part of the legal package we did at the time .In any case we had a mortgage burning party in Florida without any paperwork and it really felt good knowing we are living in our home and not the bank's.


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## MRT

congrats on the "mortgage burning" 

I guess it depends on the type of title insurance you paid for. There are policies for homeowners and for lenders. 

http://www.stewart.ca/Residential.html


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## carverman

CanadianCapitalist said:


> Just checked two insurers at random we've purchased policies from in the past. Both offer mortgage-free discounts. Sure not all insurers may offer a discount but many do.
> 
> http://www.cooperators.ca/en/Insurance/home/home-insurance-basics/save-on-insurance.aspx
> 
> http://www.belairdirect.com/en/home/save-home-insurance.html


Thanks CC. My house insurance is up on April 21st, and my present agent/insurer have increased my premiums for the renewal by $100 + tax from last year.

The letter I got was that they have to charge more because of the Alberta floods, yada..yada. Premiums for me have gone upabout $200 since the renewal in 2011, 
and I have been CLAIMS FREE for 17 years now.
Seems that they want everyone to pay for their losses in Alberta. I live in Ottawa, no floods here in many many years, and I live in an area where there is no river or creek to
flood me out. Any excuse these days it seems.

I am retired, disabled and living mortgage and claims free..surely somebody out there can cut me a better deal! :rolleyes2:


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## carverman

CanadianCapitalist said:


> Just checked two insurers at random we've purchased policies from in the past. Both offer mortgage-free discounts. Sure not all insurers may offer a discount but many do.
> 
> http://www.cooperators.ca/en/Insurance/home/home-insurance-basics/save-on-insurance.aspx
> 
> http://www.belairdirect.com/en/home/save-home-insurance.html


Checked out both for online estimates.
For my situation, 42 year old home in Nepean, retired and 270K rebuild cost, 1000 deduct, 1 mil liability ..
Bel Air: $673+ tax Co-op: $651 + tax My current insurer (Unifund) $703 + tax

Homeowner insurance is not quite the scam that dental/health insurance is (yet) but with the competition out there..it's going that way.
Example: CAA homeowner insurance..you get a quote (same price as the rest of them)..but if you join CAA, you get a 10% discount, so that compensates for the slighlty higher
quote if you are not a CAA member. Then if you buy Auto Insurance..further discount on both. If you buy any other insurance with them, possible other savings.


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