What is the difference between a ‘loan’ and a ‘mortgage’?

We often startle clients when we tell them that the home they are selling is encumbered by a mortgage. The response often is:

But we paid the mortgage off years ago!

In short, a mortgage is a legal instrument used by lenders to secure loans. It attaches to the real estate and is recorded on the title to the property.

A loan on the other hand is a contract. A promise by the homeowner to repay a debt.

You may have repaid all of the debt without arranging for the bank or credit union to ‘release’ the mortgage from the title. The releasing of a mortgage is not an automatic process that occurs on the repayment of the loan in full. It is an extra step–that will involve the payment of a Titles Registry fee–that many of our clients are not aware of.

If you are looking at selling your property and you are not sure whether or not it is encumbered by a mortgage, please feel free to contact Sarah Thompson of our office who will be happy to find out if your mortgage has been released.