Mortgage Discharge in NZ: What It Costs and How It Works

What a discharge is

When you borrowed, your lender registered a mortgage against your property's record of title. Paying the balance to zero doesn't remove it. The registration stays until a discharge is lodged with Land Information New Zealand, and until then the title still shows the bank's interest.

When you need one

• Refinancing. The old lender's mortgage comes off and the new lender's goes on, on the same day.
• Selling. The buyer needs a clear title, so your lawyer discharges the mortgage at settlement using the sale proceeds.
• Paying off the loan. Optional, as explained below.

The costs

There are two, and neither is large.

The lender's fee. Most lenders charge an administration fee to prepare the discharge, sometimes called a discharge, release or final repayment fee. Each lender publishes its own on its fees page, so check yours. We don't quote figures because they change.Legal fees. Only a lawyer or conveyancer can register the discharge. For a stand-alone discharge after paying off a loan, expect a modest fixed fee. In a refinance or sale it's part of the overall legal bill.

A break fee is a separate thing. If you repay a fixed-rate loan early, that's charged on top, and it can be far bigger than both costs above. Here's how break fees are worked out.

How long it takes

Your lawyer asks the lender for a discharge and a settlement figure. Lenders generally want several working days' notice, and some ask for more. Registration itself is electronic and close to instant once both sides are ready. In a refinance, your lawyer handles the timing so you don't need to do anything beyond signing.

Paid it off? You might not discharge straight away

Reaching a zero balance is worth celebrating. But some homeowners leave the mortgage registered and keep a revolving credit or offset facility open with a small or zero balance. The reasons are practical. A registered mortgage means you can borrow again later without new legal work, and a visible mortgage on the title offers some protection against title fraud, since the property can't be sold or remortgaged without the bank's involvement.

The other side: an open facility is a temptation and may carry account fees. If you never intend to borrow again, discharge it and have a clean title. There's no deadline, so it's your call.

This article explains how New Zealand lenders generally assess these situations. It is general information, not personalised financial advice, and lender policy changes often — check your own position with a registered adviser. Official sources: Reserve Bank of New Zealand for lending policy and the OCR, and Sorted.org.nz for independent government-backed money guidance.