How to get house title after paying off mortgage

Paying off a mortgage is a time for celebration but not a time to discard the mortgage paperwork. You now own the property outright, but the legalities of ownership must be evident in your records for tax and other reasons. Make sure all your mortgage-related papers are recorded correctly and any liens have been removed.

Tip

Keep all mortgage-related paperwork until after you sell the house in case any last minute discrepancies are found during a title search.

Secure all Mortgage Documents

When you purchased the property, a deed was issued and recorded in your name with the mortgage holder listed as a lien holder. When you pay off a mortgage, the original deed of trust is sent back to you by the mortgage holder marked “paid” or “cancelled.” This process usually takes up to 60 days, but because deeds are public records, you can check on the progress with your county registrar. You also signed a promissory note when you borrowed money to buy your property. Now that the loan is paid, the lender is responsible for sending you confirmation that the promissory note has been paid, known as a “satisfaction of mortgage.” Together, these documents show that you've paid off the mortgage.

Check Title Documents After Paying Off Mortgage

A title search was performed when you purchased the property. If you retained a copy, keep it. Regardless of how long you own the property, holding a clean title removes any “cloud on title” questions that may arise when selling. Once several months have passed and the appropriate mortgage release papers have been recorded, ask a title company to perform a new title search. You're doing this to double check that the mortgage has been removed from the title. This small investment may save you a lot of aggravation and time when you want to sell the property. A visit to your country clerk or registrar’s office to research your property will also give you the details of ownership free and clear of the mortgage lien.

Documents for the Tax Man

As per the law, you were given a Housing and Urban Development (HUD-1)statement when you purchased the property. It outlined every expense related to your purchase. This is your proof to the federal government when you sell that you paid a specific price, minus expenses, for the property. In the future as a seller, you’ll get a HUD statement. Your capital gains tax liability is based on the difference between the purchase price and the selling price, minus any capital improvements made to the property.

Three key priorities

There are three key practical steps to take well in advance of paying off your mortgage.

1. Check the insurance

Your home is likely to be your biggest asset, so it’s crucial to make sure it’s appropriately covered. Research shows that 29% of homeowners don’t have home and contents insurance and 40% of households with insurance are underinsured.

You need to have a realistic idea of what your home and contents are worth. This is likely to change significantly over your years of homeownership.

If in the face of loss or damage to your home contents, you don’t have the funds available to replace or rebuild, it could mean a financial setback.

Want to know what your property is worth? Request a free NAB property report, opens in new window today.

Want to work out what it could cost to rebuild your home or replace your contents? The Insurance Council of Australia has a calculator, opens in new window you can use. Then you can make sure you have enough insurance to cover the costs.

2. Revise your title

When you have a home loan, the bank holds the Certificate of Title until the loan has been repaid. At that point, you need to remove the lender from your title. When you’re at the tail end of your mortgage, you need to discharge your home loan. If it’s not done properly, it can impact your ability to sell your property quickly and efficiently.

Here’s how it’s done:

• Contact your lender – they’ll ask you to complete a mortgage discharge authority form.
• Complete the form as shown – it takes at least 10 business days to process your discharge, so think ahead if you need a quick sale or refinance.
• Register your discharge and Certificate of Title – at the Land Titles office in your state. Your lender can do this for you or you can do it yourself. If you are managing the process, below is where you’ll find the information you need.
• Some titles are also held electronically now so make sure you speak to your mortgage specialist to find out if this is applicable to you.

Below are links to the Land Titles offices in each state and territory.

New South Wales, opens in new window

Victoria, opens in new window

Queensland, opens in new window

ACT, opens in new window

Western Australia, opens in new window

South Australia, opens in new window

Northern Territory, opens in new window

Tasmania, opens in new window

3. Review your estate plan and will

If you don’t have a will, it should be one of your key priorities. If you die ‘intestate’ – that is, without a will – it creates a huge amount of complexity over your estate. The Court will appoint an administrator and this may not be the person who you would've chosen if a will was made. It’s a much more expensive and time-consuming process.

Working with a financial planner can make the process of putting your will together easier.

It’s also important to review your will and estate plan regularly and to update it if significant life events change your intentions regarding your estate.

These could include real estate purchases, marriage or divorce, the death of one of your beneficiaries or the birth of a potential new one. Developing an estate plan can help you protect and arrange the transfer of jointly held assets, trust assets, and superannuation benefits. These types of assets are not dealt with in a will. For example, your superannuation benefits can be distributed at the discretion of the superannuation trustee. You can put in place ‘death benefit nominations’ to ensure super benefits go to the people or organisations you choose.