The very last mortgage payment on his house is certainly an opportunity to slash the champagne. However, should you rush to cut ties with your lender by asking for a discharge?
When we ask the question on the internet, the answers of certain notary sites suggest that we must proceed at a rush.
Don’t go scared! It can drag on a bit. Even in certain circumstances, it is better to give it up.
What is the receipt?
When you finish paying for your house, the mortgage does not automatically disappear. We must specify here that the mortgage does not constitute the loan in itself, but the act by which one deposits his residence as security to the lender. This is what allows the latter to seize our property if we do not respect the terms of the contract.
Registered in the land register, the mortgage indicates that the creditor has a right to the property. To remove it from the register, you must obtain a receipt from the lender, a formality that requires the intervention of a notary, for certain fees.
As long as you don’t sell your home, you don’t have to ask for the discharge, even if the mortgage has been paid off in full.
“After several years, however, the process may require more time and cost more, which is why we often recommend not to delay,” explains notary Nathalie Sansoucy.
The advantages of waiting
Additional fees of a few hundred dollars and a little extra paperwork when reselling a property of a few hundred thousand dollars is the price to pay for waiting too long.
If we can avoid it, why not …
But keeping a mortgage on your house also has certain advantages.
Mortgage specialist Denis Doucet has not released his residence even though it is fully paid. According to him, the mortgage provides some protection against fraud.
“This is not foolproof protection, but someone who fraudulently wants to impersonate the owner of a house to offer it as collateral against a loan will generally prefer a receipted building”, explains the door- word of the mortgage brokerage firm Multi-Prêts.
A mortgage registered in the land register complicates the plans of a criminal who would like to resort to a new mortgage.
“It is true that this is an obstacle, but it will not stop a determined fraudster who benefits from the complicity of a dishonest notary. Title insurance will offer better protection, ”says Lucie Desfossés, broker at Planiprêt.
Homeowners with a home equity line of credit should keep their mortgage, of course, as long as they are disciplined.
Keep your line of credit
If the loan has been paid off and the line of credit is at zero, you can ask for a discharge. In doing so, we lose access to a cheap line of credit that we will not be able, at least in full, to recover later.
“In retirement, the margin can be very practical. We can use it as financial leverage to invest, finance the purchase of a used car or keep it as an emergency fund, ”recalls Denis Doucet.
There is no obligation to use it, but it can indeed be reassuring to know that we have the possibility of accessing funds quickly, whether it is to respond to an unforeseen event or to seize a good opportunity.
And if it arouses the temptation to indulge in extravagance, we ask for its receipt. While running.