What is a mortgage discharge fee?
Most lenders hit you with a discharge fee when you exit a home loan. Expect to pay around $300 on average.
Key takeaways
- When your home loan comes to an end your lender might charge you a mortgage discharge fee.
- Some lenders don't charge anything, but most charge around $150-400.
- You discharge a mortgage when you pay off the home loan, refinance to a new one or sell your property.
What is a mortgage discharge fee?
A lender charges a discharge fee at the end of your home loan.
The discharge fee covers the administrative costs of discharging the loan. This is when the lender is removed from your title deed.
How much do mortgage discharge fees cost?
The average mortgage discharge fee is just over $300. Some lenders charge as much as $500 or as little as $150. ANZ charges $160 but the other Big Four banks all charge $350.
What are the Big Four banks' home loan exit fees?
- Westpac discharge fee: $350
- CBA discharge fee: $350
- NAB discharge fee: $350
- ANZ discharge fee: $160
The average mortgage discharge fee is $307
Analysis of all the home loans in Finder's database found that the average mortgage discharge fee is $307. This fee can be as low as $150. Some lenders charge $500. 11% of the loans in Finder's database don't charge this fee at all.
Source:
Finder's home loan database
What other exit fees are there?
Break fees
If you exit a fixed rate home loan before the fixed period ends you might get charged a fixed rate break fee.
This fee is much more dependent on your loan factors and so it's hard to say how much they would cost. For example, the higher the loan balance you're repaying, the higher the fee is likely to be.
Government fees
State governments also charge a discharge fee when you finish a home loan. This is usually around $130 but varies by state or territory.
When do you have to discharge a mortgage?
1.) If you're repaying your mortgage in full
Once you've paid off your entire home loan, you'll have to go through the formal process discharging the mortgage. This includes if you have a split home loan and are paying off one part of it.
2.) If you're selling your home
When you're selling your home, an existing mortgage will be listed on your title as an encumbrance. That means it has to be discharged before any settlement can occur. If you're selling your home but want to keep your home loan for your next property, you can apply for what's known as a substitution of security. This removes the mortgage from the title of the property you're selling, and adds it to the property you're purchasing.
3.) If you're refinancing with a different lender
When you refinance, you're discharging a mortgage one home loan facility in order to open another, or with one lender in order to open a new home loan with a different lender. This will require a formal discharge of mortgage.
Must read: Should I keep my mortgage?
There are circumstances in which you could be better off choosing not to discharge your home loan. Let's say you've paid off almost your entire mortgage, but a big chunk of this is in extra repayments sitting in your offset account (or accessible via a redraw facility).
This money has paid off the loan but its yours to access if needed. You might have put most of your savings there.
If you repay the loan entirely you're free of debt and you can discharge the mortgage. But all that money is gone.
If you opted to keep the loan going and keep making small repayments on the remaining debt, you could keep the extra money and use it like a savings account if needed.
How can I avoid exit fees?
Not all lenders charge exit fees, so the best way to avoid them is by choosing a lender which doesn't offer them!
Aside from that, if your lender is charging a discharge fee it's likely you'll have to pay it.
If you're refinancing, you might be able to speak to your lender and bargain for a better rate with them. That way, you still get your lower rate and no discharge fee. Before you bargain with your bank, make sure you study existing options on the market so you know exactly what you're up against.
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Just pay off almost the whole loan but leave $50 owing.
I did this last time I exited a Comm bank Homeloan and as the costs were based on 3 months of interest of the outstanding amount when I went back later to pay the $50 off it was just a couple of bucks.
I have been with ANZ and have switched to another lender. ANZ have charged an ANZ Discharge Production Fee and a ANZ Settlement Fee, both of these fees were listed in the contract so I assume that these are valid fees.
However they have also charged a Discharge Registration Fee (For WA only) $164.00
I can’t seem to find anything about this fee, is this a legitimate fee?
Hi Max,
Thanks for the question!
After some research I found that this could be a state government fee that is payable to Landgate, the Western Australian Land Information Authority, for discharging, transferring, or lodging a mortgage. More information can be found on the Landgate fees breakdown page, but you may wish to query it with ANZ to find out if this is the same fee.
I hope this helps,
Marc
I’m with Bankwest variable home loan under 2 years what fees do I have to pay if I sell my house at this stage?
Hi Richard,
thanks for the question.
For the most accurate estimation of the fees you’ll pay if leaving your loan, contact Bankwest. They will be able to provide you with a quote.
Generally speaking, the exit fees depend on the specific home loan product and lender, but many lenders charge fees around $300 when discharging a home loan.
I hope this helps,
Marc.
I have been with westpac home loan for 6 years..and my home loan is variable..i would like to pay my loan out all..what fees do i have to pay…
Hi Zeia,
Thanks for reaching out.
I can confirm that there is no early exit fee for any Westpac variable rate home loan. However, to discharge a mortgage there is a fee of $350.
Kind regards,
Belinda
Hi there,
Do you know the exit fees for our variable rate home loan with St George : for $ 300k ?
Hi Gareth,
Thanks for your inquiry.
Unfortunately, we do have the information as to how much the exit fees charged by St. George on their variable home loan product. Usually, the exit fee varies from bank to bank. You’d be best if you contact St. George directly to find out how much they would charge for the exit fee.
Cheers,
May