What Happens to Your Mortgage When You Sell Your Edmonton Home? 

Are you planning to sell your home in Edmonton but still have a mortgage outstanding?  What happens to that loan when the sale goes through? If you are looking for a lawyer for selling home, understanding the mortgage payout and discharge process can help you avoid surprises before closing. It is important to note that your mortgage does not magically disappear after you accept an offer. In this blog, we will discuss the mortgage payout, possible penalties, mortgage discharge, sale proceeds, and why you need a real estate lawyer when selling a home in Edmonton. 

What Happens to Your Mortgage When You Sell Your Edmonton Home? 

When selling a home in Edmonton, your registered mortgage generally remains on the title until it is dealt with during closing.

In fact, Statistics Canada’s 2021 Census found that 65.4% of Edmonton owner households had a mortgage, showing how common this situation is. 

In Canada, if you decide to repay your mortgage ahead of schedule, there might be a prepayment fee, even if the reason for repayment is selling the house. The actual amount depends on your mortgage agreement, remaining term, outstanding balance and the lender’s calculation method.

As part of the property sale process, the lawyer will obtain the payout information from the lender and use that information to determine the amount required to pay off the mortgage on a particular date. This can include outstanding principal, accrued interest and applicable fees or a mortgage prepayment penalty.

The lender, not the lawyer, provides the final payout figure. Once the transaction closes, the required amount is generally paid from the sale proceeds according to the closing arrangements. The mortgage discharge is then addressed through Alberta’s Land Titles system. Alberta specifically allows a registered mortgage to be removed from title through a discharge. 

What Is a Mortgage Payout Statement? 

A mortgage payout statement gives you the amount required to pay out your mortgage on a specified date. The amount in the mortgage payout statement may be different from the balance shown on the online mortgage account because interest, fees or applicable prepayment charges may need to be included.

This is why sellers should not rely solely on their regular mortgage balance when estimating how much money they will receive after the sale.

If you are thinking about selling your property before the mortgage term is up, talk to your lender about your mortgage prepayment penalty and other payout costs. 

What Does a Lawyer for Selling a Home Handle? 

Your mortgage balance and the penalty for prepayment are not decided by your real estate lawyer. Your lender will give you information on these aspects. But it is crucial for you to have an experienced real estate lawyer because they help the seller manage the legal and financial steps involved at closing.

Here is how they support:

Reviewing the purchase agreement
Conducting a title search
Requesting or reviewing mortgage payout information
Preparing required closing documents
Calculating applicable adjustments
Coordinating with the buyer’s lawyer and lender where required
Arranging payment of the mortgage from closing funds
Addressing mortgage discharge requirements
Accounting for the seller’s net sale proceeds

FAQs

The Bottom Line

Selling a home with an existing mortgage involves more than accepting an offer. The mortgage payout, discharge and closing requirements all need to be handled correctly.

We at Peter B Mason Real Estate Lawyers help Edmonton sellers manage these legal steps with clear and practical guidance. If you are looking for an experienced real estate lawyer for selling a home in Edmonton, contact our team today. We will provide exceptional guidance and take the legal stress out of your closing.