# Paying off Mortgage in Full



## nathan79 (Feb 21, 2011)

My mortgage comes up for renewal in March, but I've decided to pay off the mortgage instead of renewing.

According to the renewal agreement, the Remaining Balance is $30,851.02 and the "Effective Date" is March 19th, 2016. (I'm not sure of the difference between "Effective Date" and "Maturity Date".)

I understand there is penalty of 3 months interest for paying early, so should I wait until exactly March 19th to make the final payment? (I don't want to be late either.)

Do I just make a payment from my bank or is there a special process? Of course, it goes without saying that I'm hoping to avoid any kind of fee or penalty.

I do plan to contact my "Mortgage Specialist", but the more info I have in advance the better.

Edit: the mortgage company also collects my property tax, so I'm pretty sure I'm due a refund on that.


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## Mortgage u/w (Feb 6, 2014)

Your bank will be the best source for the answers to your questions. You'll need to contact them regardless in order to make the lump sum payment and close your mortgage.

In general, if you pay off your mortgage today with a maturity of March 19, you simply pay the interest due between now and maturity (+/- 1.5 months). Whether you pay now or at maturity, you're going to pay the equivalent in interest so if you want to get it over with, you might as well do it now. If you have a surplus in your tax account, you will get it back. Note that you will pay a discharge fee - ensure the bank actually discharges the mortgage and sends you a copy of it. The difference between effective and maturity date: these should usually be the same unless you differed a payment at some point throughout your mortgage - some lenders will add the interest due at the end of the term which ends up changing the dates. So maturity date is when your principal matures. Effective date includes the interest.


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## Davis (Nov 11, 2014)

More importantly, what are you doing to celebrate this great achievement?


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## nathan79 (Feb 21, 2011)

Mortgage u/w said:


> Your bank will be the best source for the answers to your questions. You'll need to contact them regardless in order to make the lump sum payment and close your mortgage.
> 
> In general, if you pay off your mortgage today with a maturity of March 19, you simply pay the interest due between now and maturity (+/- 1.5 months). Whether you pay now or at maturity, you're going to pay the equivalent in interest so if you want to get it over with, you might as well do it now. If you have a surplus in your tax account, you will get it back. Note that you will pay a discharge fee - ensure the bank actually discharges the mortgage and sends you a copy of it. The difference between effective and maturity date: these should usually be the same unless you differed a payment at some point throughout your mortgage - some lenders will add the interest due at the end of the term which ends up changing the dates. So maturity date is when your principal matures. Effective date includes the interest.


Great info -- thanks.



Davis said:


> More importantly, what are you doing to celebrate this great achievement?


No idea yet. I'm not even prepared for my friends' surprised reactions when I tell them the news.


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## GreatLaker (Mar 23, 2014)

Contact the bank and ask them to prepare a mortgage statement for payoff purposes. The statement should indicate total payable including remaining principal, any accrued interest, a credit or debit for property taxes, and any applicable discharge fees (bank discharge fee, registry office discharge registration fee). Ask if they will waive their discharge fee, but the registry office fee will likely apply.

They can also tell you how you can remit payment. They may require a bank draft if you are paying from a different bank than the one that holds the mortgage.


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## Bowzer (Feb 25, 2015)

nathan79 said:


> I'm not even prepared for my friends' surprised reactions when I tell them the news.


I plan on paying my mortgage off in full this year but I've concluded most people don't want to hear how good you are doing. It's sad that we live in a society where people post facebook photos of a new car they bought taking on years of debt, but we can't celebrate paying off our house for fear of rubbing their noses in it.


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## Eclectic12 (Oct 20, 2010)

Weird ... most of my relatives and fiends first celebrated that I was mortgage free before moving into complaining about why they couldn't. Actually, the complainers/jealous types were more friends as most of the relatives are or are about to be mortgage free.


Cheers


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## Soon Forget (Mar 25, 2014)

nathan79 said:


> No idea yet. I'm not even prepared for my friends' surprised reactions when I tell them the news.


This reminded me of a thread I read on Bogleheads a while back: https://www.bogleheads.org/forum/viewtopic.php?f=2&t=138334

I think the general consensus was... keep it to yourself.


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## none (Jan 15, 2013)

It is an odd thing to celebrate as it's hard to guage what the opportunity cost of paying it off way. remember that guy who lived like a beggar for 3 years to pay his off? Was that worth it? I'm not sure.


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## Eclectic12 (Oct 20, 2010)

^^^

The "live like a beggar" sure proves that people can dump on one heavily ... despite my personal experiences ... each:


As for "keep it to yourself" ... I suspect it is similar to discussing investing etc. - know the audience and if in doubt, pick a topic the audience is known to be interested in. :biggrin:


Cheers


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## nathan79 (Feb 21, 2011)

none said:


> It is an odd thing to celebrate as it's hard to guage what the opportunity cost of paying it off way. remember that guy who lived like a beggar for 3 years to pay his off? Was that worth it? I'm not sure.


Actually, I spent a lot last year and my net worth barely increased over the last 12 months.

I also have to weigh whether it makes sense to pay 2.5% on a mortgage while I'm collecting less than that in savings accounts and stocks are going nowhere fast. I know some will disagree and say I should invest everything in stocks/etfs now, but no one can really predict when markets will turn around.

I may sell my condo soon anyway, so having it paid off before hand will simplify things a bit when the time comes.


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## heyjude (May 16, 2009)

nathan79 said:


> I also have to weigh whether it makes sense to pay 2.5% on a mortgage while I'm collecting less than that in savings accounts and stocks are going nowhere fast.


The way I see it is that you are investing at a guaranteed rate of 2.5%. It makes sense to me. Of course, if this was an investment property, mortgage interest would be tax deductible, so the effective interest rate would be lower. I own an investment property with an old 5 year mortgage at just over 4%. Even accounting for tax deductible interest, paying down principal was the best investment vehicle available in 2015. The payoff will be earlier cash flow when the mortgage is paid off.


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## Berubeland (Sep 6, 2009)

Pauline said:


> Luckily, I never had to worry about my mortgage because Noble Black my realtor helped make sure I get the best rate for my mortgage.


There is a chance that Pauline is not a real person just an advocate for the realtor par excellence Noble Black. :apathy:


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## Mechanic (Oct 29, 2013)

Congrats on paying off the mortgage. When I had paid mine off, I went to sell the place about 10 years later and the bank still had a caveat on it. A couple of calls to them and it was easily sorted. One of my kids paid off their mortgage quickly and went to buy a new place and the builder was in disbelief that it was a cash deal for such a young family. I'd caution letting too many people know, some people treat you differently when they know you are doing well. Just take satisfaction of a hurdle down and move on to the next one.


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## Rusty O'Toole (Feb 1, 2012)

There will be no renewal fee as you are not renewing and no cancellation fee as you are not cancelling. You are paying off the mortgage when it expires as agreed. Get the statement from the bank and go over it carefully. Question anything iffy looking.

Incidentally for those of you who would like to pay off your mortgage but don't want to pay a penalty there should be a provision in there allowing you to pay off a certain part of the loan each year without penalty. I took advantage of this before paying off my mortgage. Remember, every time you pay down principal a bigger chunk of your monthly payment goes to paying down principal because the interest becomes less.

If you have a home equity line of credit or can turn your mortgage into one, you can pay off without a fee.


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## Eder (Feb 16, 2011)

Don't do like me...I paid off my mortgage and later had a huge potlatch with all my friends...at the height of the party frenzy I threw my paperwork that CIBC sent me into the bon fire to much applause and more beers. 12 years later when I sold the home I had to pay CIBC several bucks to dig up my paperwork from the archives. Still was worth paying off just for less weight on the shoulders...debt is the chain that ties us down.


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## heyjude (May 16, 2009)

Eder said:


> Don't do like me...I paid off my mortgage and later had a huge potlatch with all my friends...at the height of the party frenzy I threw my paperwork that CIBC sent me into the bon fire to much applause and more beers. 12 years later when I sold the home I had to pay CIBC several bucks to dig up my paperwork from the archives. Still was worth paying off just for less weight on the shoulders...debt is the chain that ties us down.


Make a copy for the mortgage burning party and keep the original in your safety deposit box!


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## nathan79 (Feb 21, 2011)

Thanks everyone for your input.

It's done -- the final payment came out today.

The only thing left to do is remove the mortgage from the title. Is it usually cheaper to hire a solicitor, or let the mortgage company take care of it? They gave me the option of paying them $250 for the service. I was already charged a $75 Administration Fee. I thought that was supposed to cover everything, but I guess not?


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## Numbersman61 (Jan 26, 2015)

You should be able to file the paperwork yourself - just take documents to Land Title Office


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## Mukhang pera (Feb 26, 2016)

Numbersman61 said:


> You should be able to file the paperwork yourself - just take documents to Land Title Office


Filing the discharge is simple, by turning up at the LTO as Numbersman suggests. If the lender is one of the "conventional" lenders, such as a bank, they will probably charge you a fee for providing you with a discharge in registrable form. The fee might be a bit more if the bank has its lawyer of agent attend to both preparation and filing of the discharge. I have sometimes presented the bank with a discharge in registrable form and simply asked that he be executed and returned. Then I go file it myself or pay a few bucks for a land title agent to do it. In that case, sometimes the discharge fee gets waived/overlooked. But it's usually nominal anyway.


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## Sasquatch (Jan 28, 2012)

Rusty O'Toole said:


> There will be no renewal fee as you are not renewing and no cancellation fee as you are not cancelling. You are paying off the mortgage when it expires as agreed. Get the statement from the bank and go over it carefully. Question anything iffy looking.
> 
> Incidentally for those of you who would like to pay off your mortgage but don't want to pay a penalty there should be a provision in there allowing you to pay off a certain part of the loan each year without penalty. I took advantage of this before paying off my mortgage. Remember, every time you pay down principal a bigger chunk of your monthly payment goes to paying down principal because the interest becomes less.
> 
> If you have a home equity line of credit or can turn your mortgage into one, you can pay off without a fee.


That's exactly what I did. I followed the "extra payment" and " increased monthly payment annual allowances" to a tee and payed it off in under half of the original term.


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## nathan79 (Feb 21, 2011)

Mukhang pera said:


> Filing the discharge is simple, by turning up at the LTO as Numbersman suggests. If the lender is one of the "conventional" lenders, such as a bank, they will probably charge you a fee for providing you with a discharge in registrable form. The fee might be a bit more if the bank has its lawyer of agent attend to both preparation and filing of the discharge. I have sometimes presented the bank with a discharge in registrable form and simply asked that he be executed and returned. Then I go file it myself or pay a few bucks for a land title agent to do it. In that case, sometimes the discharge fee gets waived/overlooked. But it's usually nominal anyway.


Good to know. I'm with First National Financial LP (not a regular bank)... I'm not sure whether that makes a difference.

According to BC law, they can't charge more than $75 for preparing the discharge. I've already been charged this amount.

So I'm guessing the optional fee of $250 is for basically for filing the necessary paperwork with the Land Title Office. If that's as simple as it sounds, it would be ludicrous to pay someone $250 to do it.

I guess most people just pay it because they have no clue what they're supposed to do.


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## My Own Advisor (Sep 24, 2012)

Congrats on being mortgage free Nathan!!

*Well done.
*
On the flipside, $250 isn't that much to spend given you've likely spend tens of thousands of dollars in borrowing costs to own the house outright. That works out to paying about $0.70 per day over one year. Just food for thought. Some convenience always comes at a cost


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## NorthKC (Apr 1, 2013)

$250 for lawyer to ensure everything is done will pay in dividends when you eventually sell the home.


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## twa2w (Mar 5, 2016)

Nathan79, you seem to have it all worked out. 
As you found out, most of the mortgage lenders will prepare the discharge for you but the bank does not register it. Many people don't know this so years later when they sell, the mortgage is still on title. 
You won't have any issues taking the discharge to the land titles/registry office for filing and it will cost a lot less than the mortgage Co will charge. Once it is registered, get a copy of title to be sure. Sometimes when you give the titles office the discharge it takes a few days to be registered depending on the province.
Congrats on the mortgage payoff.


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## nathan79 (Feb 21, 2011)

twa2w said:


> Nathan79, you seem to have it all worked out.
> As you found out, most of the mortgage lenders will prepare the discharge for you but the bank does not register it. Many people don't know this so years later when they sell, the mortgage is still on title.
> You won't have any issues taking the discharge to the land titles/registry office for filing and it will cost a lot less than the mortgage Co will charge. Once it is registered, get a copy of title to be sure. Sometimes when you give the titles office the discharge it takes a few days to be registered depending on the province.
> Congrats on the mortgage payoff.


Thanks!

I received the discharge a few days ago, but I haven't got around to dealing with it yet. I see there's an option to receive a State of Title certificate. Seems like a good idea.

The only thing I'm not sure about is the area for an "electronic signature". Will a regular signature do, or should I leave it blank? My gut says leave blank, but if I can't find the answer I'll just ask when I get to the Land Title Office.


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## Westerncanada (Nov 11, 2013)

nathan79 said:


> Thanks!
> 
> I received the discharge a few days ago, but I haven't got around to dealing with it yet. I see there's an option to receive a State of Title certificate. Seems like a good idea.
> 
> The only thing I'm not sure about is the area for an "electronic signature". Will a regular signature do, or should I leave it blank? My gut says leave blank, but if I can't find the answer I'll just ask when I get to the Land Title Office.



Congratulations! Great work.. happy to hear that and hope you're celebrating


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## Rusty O'Toole (Feb 1, 2012)

Sasquatch said:


> That's exactly what I did. I followed the "extra payment" and " increased monthly payment annual allowances" to a tee and payed it off in under half of the original term.


My mortgage allowed paying off $10,000 a year so I paid off $10,000 in November and another $10,000 the next January. Then made my regular payments until the mortgage came due in July and paid it off. This was the cheapest way to do it.


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## nathan79 (Feb 21, 2011)

For anyone thinking of trying to discharge the mortgage yourself - don't bother, it's not worth the hassle unless you have experience in the matter.

I tried to register the discharge at the Land Title Office. I thought everything was fine, but two weeks later they mailed it back to me "defected". Now I will have to contact a notary to figure out what's wrong, so I doubt I'll save any money in the end.

I'm a firm believer in DIY but from now on I'll leave the legal stuff to the pros.


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## My Own Advisor (Sep 24, 2012)

Sorry to hear Nathan. 

In the end, $250 isn't that much to spend (for discharge fees, etc.) given you've spent tens of thousands of dollars in borrowing costs to own the home.

Jealous of your mortgage free existence  Well done. 

We're trying to kill our mortgage via:
1. Shortened latest amoritization period from 25 years to 20 years.
2. Went variable with 1.95% 5-year term.
3. Use the double-up payment option.
4. Where possible, use lump sum payment options (try to do that each month although with competing priorities that's tough).

We're optimistic we can slay the dragon in another 5 years. That would mean we've killed off >$300k in mortgage debt in about 10 years.


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## Bowzer (Feb 25, 2015)

I cannot wait to cut a cheque and pay off my house in full.

Everything in life isn't figured out in a calculator. Otherwise we wouldn't have kids. Or we wouldn't have more than 1 kid. Kids are expensive.

If you are one to be able to pay off a mortgage early, obviously you are making good choices with your finances in general, to be in that situation. So then it's just about moving percentage points around. I'll take the satisfaction of a paid off home, thanks.


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