What happens to my mortgage when I sell?
Selling your home and wondering “What happens to my mortgage when I sell?” — here’s the blunt, simple answer that will save you time, stress, and money.
Quick summary — what to expect when you sell in Milton, ON
- Your mortgage stays attached to the property until it’s paid off or transferred.
- At closing your lawyer requests a mortgage payout statement from your lender and uses sale proceeds to discharge the mortgage.
- If you break your mortgage term early you may pay a prepayment penalty — get the payout amount early.
- Some mortgages are portable or assumable; most require payoff unless the lender agrees otherwise.
- Any liens on title (construction liens, tax arrears, judgment liens) must be cleared before closing.
Read on for a step-by-step roadmap for Milton homeowners, legal traps to avoid, and fast-action tactics you can use right now.
Step 1 — Know what’s registered on your title
In Ontario, mortgages and liens are registered on title at the Land Registry Office. That means anyone buying your home will see every encumbrance. Before listing, order a title search and a mortgage payoff statement. If you skip this, you hand the buyer uncertainty and slow the sale.
Local tip: Milton title searches are fast, but do it early. Construction is booming around Milton (Crawley, Dempsey, and Steeles corridors). Builders and subcontractors file construction liens more often in active developments. Don’t discover a lien at the last minute.
Step 2 — Get a mortgage payout statement from your lender
This is non-negotiable. The payout statement shows exactly how much the lender requires to discharge your mortgage on a specific date. It includes principal, interest to the date, and any applicable penalties or administrative fees. Ask for the statement in writing and lock in the date to match your closing.
Action: Call your lender the week you list. Ask for a payout figure valid through your expected closing date.
Step 3 — Understand penalties and prepayment rules
Mortgage terms vary. Some fixed-rate mortgages have hefty penalties for breaking the term. Others let you port the rate and term to a new property (portable mortgage). If you’re buying and selling simultaneously, porting can save thousands.
If you can’t port, compare the penalty vs. refinancing the moment you close on the next home. Don’t guess — run numbers with your mortgage broker or lender.
Milton context: With local prices moving quickly, many sellers are buying up. Porting gives sellers leverage. If your lender won’t port, you may have a negotiation point when you make offers on your next purchase.
Step 4 — Liens: the silent deal-killers
Types of liens to watch for in Milton and Ontario:
- Construction liens (Construction Act) — common on renovations or recent builds.
- Municipal liens — unpaid property taxes, outstanding local charges.
- Judgment liens — court-ordered claims from creditors.
A buyer’s lawyer will flag liens during title check. Your lawyer must clear them before closing or the buyer can walk. That means either pay the lien or negotiate a holdback with your buyer’s lawyer — not ideal.
Action: If you’ve had recent renovations or contractor work, ask your contractor for lien release letters before you list.
Step 5 — Closing day: how the money moves
- Buyer funds close to their lawyer.
- Your lawyer requests mortgage discharge funds from your lender using the mortgage payout statement.
- Your lawyer pays off the mortgage and obtains a discharge registration.
- Any liens or outstanding bills get paid from sale proceeds.
- Your lawyer transfers net proceeds to you.
If sale proceeds don’t fully cover your mortgage and other debts, you must bring funds to close or negotiate with your lender. A short sale is rare in Canada; lenders usually require full payoff unless they consent to another arrangement.
Porting vs. Assuming vs. Paying Off — what’s the difference?
- Porting: You move your existing mortgage to your new property and keep the same rate and terms. Many lenders allow this if you qualify.
- Assuming: A buyer takes over your mortgage as-is. This is rare and only allowed if the mortgage contract permits assumption and the buyer qualifies.
- Paying off: Most common. Sale proceeds go to the lender, mortgage discharged, you get the net proceeds.
Milton sellers should ask their lenders: “Is my mortgage portable? Is it assumable?” Get answers in writing.
What if sale proceeds are less than the mortgage? (Shortfall)
If the sale price doesn’t cover your mortgage, you must bring money to close. If you can’t, options are:
- Negotiate with your lender for a consent — unlikely without plan.
- Delay closing and refinance if possible.
- Consider selling to an investor for ‘as-is’ closing, but expect lower offers.
Don’t wait. If your home is valued close to your mortgage balance, talk to your lender before listing.
Legal considerations specific to Milton and Ontario
- Title registration: Ontario’s land registration system records mortgages and liens. Your lawyer will handle discharge registration.
- Construction Act: Ontario’s law gives contractors a right to register liens quickly. If you’ve had recent work, get lien waivers.
- Property taxes: Milton follows Halton Region and Town of Milton rules. Unpaid taxes appear as municipal liens and must be cleared.
- Lawyer involvement: Ontario requires lawyers or paralegals to manage closings. Use a local Milton real estate lawyer or one familiar with Halton processes.
Local note: Land transfer taxes and legal fees vary. Sellers generally pay legal fees to discharge the mortgage and handle adjustments. Expect communication between your Milton realtor, your lender, and your local lawyer to be frequent in the two weeks before closing.
Practical checklist for Milton sellers — do this now
- Order a title search and your mortgage payout statement.
- Confirm whether your mortgage is portable or assumable.
- Get lien release letters for recent renovations.
- Check municipal tax account — pay down any arrears.
- Speak with a Milton real estate lawyer and set closing date details.
- Coordinate timing between sale closing and purchase closing if buying another home.
- Schedule movers and final walk-through dates after lawyer confirmation.
Negotiation tactics a Milton seller can use
- Offer a clean title promise: buyers pay more for smooth closings.
- If you must pay a lien, ask for a price that reflects the net you need.
- If your mortgage penalty is high, offer a longer closing window to give time to port or secure new financing.
These moves get deals done faster and protect your bottom line.
Why work with a local expert
Milton’s market moves fast. You need someone who knows the lenders that work well with Milton buyers and the local lawyers who clear title quickly. A local realtor coordinates the payout statements, pushes for portable mortgage approvals, and keeps buyers calm if a lien pops up.
If you want this handled without late-night calls and last-minute surprises, call Tony Sousa — local Milton agent. He’ll explain your mortgage payoff options, coordinate with your lender and lawyer, and keep the sale on schedule.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
FAQ — Mortgages & Liens when selling in Milton, ON
Q: Will I automatically be released from my mortgage when I sell?
A: No. Your mortgage stays on title until the lender is paid and the discharge is registered. Your lawyer handles the discharge at closing using the lender’s payout statement.
Q: How long does it take to remove a mortgage after closing?
A: The discharge is typically registered within a few business days after the lender receives payoff funds. Your lawyer confirms registration and provides proof.
Q: What if I have a construction lien on my property?
A: A construction lien must be cleared or otherwise addressed before closing. Options: pay the lien, obtain a lien release from the claimant, or negotiate a holdback with the buyer. Contact a real estate lawyer immediately.
Q: Can the buyer assume my mortgage?
A: Only if the mortgage contract permits assumption and the buyer qualifies under the lender’s rules. This is uncommon. Always ask your lender in writing.
Q: What are typical seller closing costs in Milton?
A: Sellers usually pay legal fees for discharge, real estate commission, and any outstanding adjustments (property taxes, utilities). Legal fees vary; get a quote from a local lawyer early.
Q: What is porting and is it worth it?
A: Porting moves your existing mortgage to a new property with the same rate/term. It’s worth it when your current rate is lower than the market. Confirm eligibility and conditions with your lender.
Q: Who pays off the mortgage at closing?
A: Your lawyer uses sale proceeds to pay the lender according to the payout statement. If sale proceeds are short, you must bring funds to close or arrange another plan.
Q: How do I prevent liens from causing delays?
A: Get lien release letters from contractors, confirm municipal taxes are paid, and order a title search early. If a lien exists, sort it immediately with your lawyer.
Q: If I owe more than my house is worth, what are my options?
A: Speak with your lender first. Options include refinancing, bringing funds to close, or negotiating with the lender. Short sales are rare in Canada; lenders usually seek full payoff.
Q: Who do I call for help in Milton?
A: Start with your lender for a payout statement, then contact a local real estate lawyer. For help coordinating everything, reach out to Tony Sousa: tony@sousasells.ca | 416-477-2620
Selling a house is a transaction. Don’t make it a drama. Get documents early, clear liens fast, and decide if porting or paying off makes more sense. If you want a local pro who moves deals through the system in Milton without drama, call Tony Sousa — he knows the lenders, the lawyers, and the common traps.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
