Mortgage free? Don't celebrate just yet

Partner Robert Telfer with some advice for newly mortgage free homeowners

Paying off your mortgage is a major milestone and brings with it a huge feeling of achievement and a sense of relief. Thoughts quickly turn to how to spend the money you’ll save on monthly repayments. A new car or a dream holiday perhaps?

But don’t relax just yet…

At the end of your term, your mortgage lender will write to you to advise that your account has been paid off. However, before you crack open the Champagne in celebration, there are some practical steps to be taken once you have received this letter. Essentially, you will be required to instruct a solicitor to arrange to have the lender’s security over your property discharged.

At the point of taking out your mortgage, you may recall signing a Standard Security. This was registered over your property’s title as collateral for your debt. This gave the lender the right to repossess your home if you defaulted on the repayments and/or failed to comply with the mortgage conditions.

After your mortgage is repaid in full, the security should be removed by instructing a solicitor, leaving your title clear and unencumbered. The process involves instructing your solicitor to draw up a Discharge and sending it to the lender. They will then sign or seal the deed confirming that the mortgage has been paid in full and there are no outstanding payments due. Once the lender returns the Discharge, your solicitor will then send the deed for registration with the Land Register of Scotland, the official body which records ownership of land and property in Scotland.

Although it is not absolutely essential to have the security discharged immediately at the end of the loan, this is the best time to do so. Mortgage details can go missing or are forgotten with the passage of time. Without these details, discharging a mortgage can be more difficult and time consuming and could result in a higher legal fee.

In any case, the matter will also have to be dealt with at some point, especially if you plan to downsize and sell on as a clear title will have to be presented to the new owner. Most clients prefer to discharge their mortgage as soon as possible to give them the comfort and knowledge that they have a clear and free title to their home.

If your mortgage is about to come to the end of its term, why not call the team at team at MacDonald Lynch for some initial advice. Call 0141 649 9552 and we’ll be happy to advise you on the next steps.