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Unlocking the mystery of home loan discharge fees

Many lenders still charge discharge fees when you exit a home loan. Here's what they are and how much you can expect to pay.

What is a mortgage discharge fee?

Put simply, discharge fees are a fee you might have to pay at the end of your home loan - whether that's because you've completely paid it off or you're refinancing and simply ending the loan with that lender.

They cover the administrative costs of discharging the loan. Discharge fees can also be called settlement fees (not to be confused with the settlement fees you pay at the start of the loan!)

How much do discharge fees cost?

Many lenders do not charge discharge fees, but for those who do the cost can vary from $150 to $400. These fees are what you’ll have to pay to get a hold of your title deeds.

Lenders can also charge what they refer to as ‘early discharge’ or ‘early termination fees’. You might have to pay this if you repay the loan amount completely within a stipulated timeframe, for example within the first five years. The flipside is that the law states that these charges cannot exceed the losses incurred by lenders owing to such early loan terminations.

The most important takeaway to remember is that if you feel these charges are excessive or unfair, don’t hesitate to lodge a complaint with your lender.

What are the big four banks' home loan exit fees?

  • Westpac: $350
  • CBA: $350
  • NAB: $350
  • ANZ: $160

What other exit fees are there?

Early termination fees (or break costs).

You might need to pay a fee if you end the loan before a specified time, like if you have fixed the loan for a certain number of years.

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.

How much do early termination fees cost?

The cost of early termination fees, or break fees, depend on multiple factors like the original loan amount, outstanding balance, how much time remains on the fixed term and the prevailing interest rate. The higher the outstanding balance, the higher the break costs. The same applies with the remaining loan term.

When it comes to the interest rate, lenders compare the interest rate that you fixed at with other interest rates they have on offer. If your interest rate is lower, expect to pay break costs.

Break costs often come into the picture if you want to leave your home loan when there’s a better deal, or if you make too many additional repayments on your home loan. Even if you’re not leaving your loan to refinance, there are many reasons you might leave your home loan, such as moving overseas or interstate, accepting sudden profitable offers from buyers or receiving a substantial increase in income

When do you have to discharge a mortgage?

Home loans are a long-term proposition, and when you take one out it's doubtful you're already thinking about the logistics of discharging it. However, there are a variety of circumstances that might require you to discharge a home loan, and not all of them fall at the end of the loan term.

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.

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 repayments accessible while you build up more savings outside the home loan. It depends on whether you need that money or not.

How do I discharge a mortgage?

Discharging a mortgage is a fairly straightforward process:

1. Notify your lender

Notify your lender to discuss your plans to discharge your mortgage. Your lender will then ask you to complete a Discharge Authority form. Most lenders either have the form on their site, or have an online portal for requesting the form.

2. Complete and return the Discharge Authority form

Next, complete the form and return it to your lender. If you're selling your property, ensure you complete the form in a timely manner. It will take the lender at least 10 business days to process your request. You might want to think about completing the form in person at a branch so your lender can help you through the process.

3. Register your discharge and Certificate of Title

If you've repaid your home loan, the lender can either register your Discharge of Mortgage at the Land Titles office on your behalf, or they can send you both the Discharge of Mortgage and Certificate of Title to register at the Land Titles office.

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.

There are some banks that may have conditions you can meet in order not to pay exit fees, for instance, if you have enough security.


If you’ve decided that you want to pay off your loan ahead of time or that you want to switch to a new loan, establish just how much you’ll have to pay as part of the process after accounting for all exit and early repayment fees. If you’re looking for refinancing options, compare the rates of existing loans and find out if you’ll actually save by making the switch. If you’ll save money, go for it.

Frequently asked questions about mortgage discharge fees

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Rebecca Pike is Finder's senior writer for money. She joined Finder after almost four years writing for business publications in the mortgage and finance industry, including three years as editor of Mortgage Professional Australia. She regularly appears as a money expert on programs like Sunrise and Today, as well as across radio and newspapers. She also holds ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products. See full bio

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9 Responses

    Default Gravatar
    RobertJanuary 9, 2017

    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.

    Default Gravatar
    MaxJune 19, 2016

    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?

      AvatarFinder
      MarcJune 21, 2016Finder

      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

    Default Gravatar
    RichardApril 25, 2016

    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?

      AvatarFinder
      MarcApril 26, 2016Finder

      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.

    Default Gravatar
    ZeiaApril 20, 2016

    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…

      Default Gravatar
      BelindaApril 21, 2016

      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

      Default Gravatar
      GarethJuly 25, 2016

      Hi there,

      Do you know the exit fees for our variable rate home loan with St George : for $ 300k ?

      AvatarFinder
      MayJuly 27, 2016Finder

      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

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