How to Discharge Your Mortgage When Selling in Australia (2026)
When you sell your property, your mortgage must be discharged — formally released — so that the title can be transferred to the buyer free of your lender’s security interest. This process is managed by your conveyancer, but understanding how it works helps you avoid delays on settlement day.
What Is a Mortgage Discharge?
A mortgage (or registered charge) is recorded on your property’s title as a form of security for your lender. Until it is discharged, the title is encumbered — it cannot legally transfer to a new owner without the mortgage being released.
Mortgage discharge is the formal process of:
- Paying out the outstanding loan balance (from the settlement proceeds)
- Your lender authorising the release of the registered charge
- The title registry removing the mortgage from the title
The Discharge Process Step by Step
Step 1 — Notify your lender
Your conveyancer issues a Discharge Authority to your lender — a formal written request to discharge the mortgage at settlement. Most lenders require 10–15 business days’ notice before the scheduled settlement date.
Act early — notify your conveyancer of your settlement date well in advance. Late notification is one of the most common causes of settlement delays.
Step 2 — Confirm the payout figure
Your conveyancer requests a formal payout figure from your lender — the exact amount required to repay the loan on the settlement date, including interest calculated to the day of settlement.
The payout figure includes:
- Outstanding principal balance
- Interest to settlement date
- Break costs (for fixed rate loans — see below)
- Discharge fee
Step 3 — Electronic settlement via PEXA
Most Australian settlements now occur electronically through the Property Exchange Australia (PEXA) platform. Your conveyancer, the buyer’s conveyancer, and both lenders (if applicable) coordinate in a PEXA workspace.
On settlement day:
- The buyer’s funds are deposited into the PEXA workspace
- Your mortgage is discharged simultaneously
- The title transfer is registered
- Net funds are distributed to you (after mortgage payout, agent commission, and other costs)
Step 4 — Title registry update
The state land registry records the transfer of title to the buyer’s name and removes your lender’s registered charge.
Discharge Fees
Your lender charges a fee for processing the mortgage discharge. This is separate from your conveyancing fee.
| Lender | Typical discharge fee |
|---|---|
| Most major banks | $150–$400 |
| Some specialist/non-bank lenders | $300–$600 |
Where to find your discharge fee: Check your loan product disclosure statement, loan schedule, or call your lender directly. Your conveyancer should include this in their settlement cost estimate.
Fixed Rate Loans — Break Costs
If your mortgage is on a fixed rate and the sale occurs before the fixed rate period expires, your lender may charge a break cost (also called an early repayment adjustment or ERA).
Break costs can be substantial:
- They reflect the lender’s cost of unwinding the fixed rate arrangement
- Can range from $0 to tens of thousands of dollars, depending on the rate differential and remaining fixed period
- Are generally higher when current market rates have fallen below your fixed rate
Request a break cost estimate from your lender before setting a settlement date. This is especially important if your fixed rate has a significant period remaining.
What Happens to Your Net Proceeds
On settlement day, funds flow as follows:
- Buyer deposits full purchase price into PEXA workspace
- Your lender receives the payout amount (principal + interest + discharge fee ± break costs)
- Your real estate agent’s commission is paid (usually deducted from vendor proceeds per agent trust account arrangements)
- Conveyancing fee and disbursements deducted
- Any settlement adjustments (council rates, water, strata) calculated
- Net proceeds deposited to your nominated bank account
Common Causes of Settlement Delays (Discharge Related)
| Issue | How to avoid |
|---|---|
| Late discharge authority to lender | Notify conveyancer immediately when settlement date is agreed |
| Lender processing backlog | Submit notice early; confirm receipt with lender |
| Break cost disputes on fixed loans | Get break cost estimate before settlement; budget accordingly |
| Title search reveals additional charge (e.g., judgement debt) | Flagged during conveyancing process; resolve before settlement |
If You Have Multiple Mortgages
Some properties have more than one registered charge — for example, a first mortgage and a home equity line of credit. Each registered security must be discharged at settlement. Your conveyancer coordinates all discharges simultaneously. Notify your conveyancer of any additional loans or lines of credit secured against the property.
Frequently Asked Questions
How much notice does my lender need to discharge my mortgage?
Most Australian banks require 10–15 business days. Some lenders offer expedited discharge for an additional fee. Check with your lender early in the process.
Can I discharge my mortgage and stay in the property after settlement?
Your mortgage is discharged on settlement day as part of the property sale. You must vacate the property by the agreed settlement time (typically noon or close of business on settlement day). If you wish to remain temporarily, this must be negotiated with the buyer and included in the contract.
I’ve paid off my loan but never discharged the mortgage. Does this affect the sale?
Yes — even if the loan balance is zero, the registered mortgage charge on the title must be formally discharged before the title can transfer. Contact your lender (or former lender) to arrange a discharge of a fully repaid loan.
Related Selling Guides
- What to Expect on Settlement Day as a Seller
- Vendor Conveyancing — What the Seller Pays For
- Selling and Buying Simultaneously — Managing the Overlap
- Selling Your Home Hub
This article provides general information about mortgage discharge in Australia. Always engage a licensed conveyancer to manage your settlement. Contact your lender directly for your payout figure and discharge fee. Find a conveyancer through MoneySmart.