Did you know that even if you’ve paid off your mortgage balance, your lender can remain on your home insurance policy?
To understand what exactly homeowners need to do when they pay off their mortgage, our MyChoice team reviewed the Financial Consumer Agency of Canada’s mortgage-discharge guide, FCAC’s home-insurance guide, and Ontario’s land-registry overview.
Learn what questions to ask your lender and insurer, the difference between discharging your mortgage and paying off the loan, how a HELOC can change the decision, and what happens after you pay off your mortgage in Canada.
Should You Notify Your Insurer After Paying Off Your Mortgage?
Yes, although this is separate from having your mortgage discharged from your title.
Once you have confirmation that your loan is paid in full, call your insurer/broker and ask what verification they need to remove the lender from your mortgage/loss-payee clause. Ask them to send an updated version of your policy showing the lender’s name has been removed.
Do not assume the lender will call your insurance company for you. These are separate processes with separate documentation.
Why You Should Notify Your Insurer That You’ve Paid Off Your Mortgage
Homeowners who have paid off, or will soon pay off, their home loan should also contact their insurer. A mortgage clause protects the lender’s financial interest in the insured property.
On properties with mortgages, the lender is likely listed as the loss payee on the homeowner’s insurance policy, FCAC points out. Loss-payee information can affect how claim payments are issued. Removing the lender doesn’t automatically affect coverage, but you should update the policy to reflect your current mortgage status.
What Else Should You Do After You’ve Paid Off Your Mortgage?
| Step | What to request or verify | Why it matters |
|---|---|---|
| Get payoff confirmation | Now that you’ve paid off the balance on your mortgage, contact your lender for written confirmation of the zero balance as well as information about the lender’s discharge process. | According to FCAC, most lenders won’t send confirmation of mortgage payoff unless borrowers ask. |
| Check related credit | Check whether any other product that’s secured by your home, such as a home equity line of credit, is still open or has a balance. | Once the mortgage is paid off, a linked HELOC may have to be paid off and closed as well in order for the title to be discharged. Alternatively, the HELOC can be left in place so future credit can be accessed. |
| Decide on discharge | Ask about discharge fees from your lender, registry fees and lawyer’s, notary’s or commissioner’s fees. Find out who prepares and registers the discharge and what documentation will be required. | Once the loan has been paid in full, your lender will still have rights registered against your property’s title until a discharge is registered. |
| Update home insurance | After the mortgage is paid off, send the requested proof to your insurance carrier and make sure you receive an updated homeowner’s insurance declaration or policy that does not include the lender. | Failure to do so could leave the lender listed in the instructions for paying a claim. |
| Redirect property tax | Once your mortgage is paid off, find out whether your lender will stop paying your property taxes and whether your municipality will collect them from you directly. | You may need to arrange direct payments to your municipality. |
| Stop and monitor payments | If you have automated payment instructions set up with your mortgage company, ask when they will stop. Do not cancel them until you have verified that the lender received your last payment and confirmed that the account is settled. | Otherwise, a final adjustment or fee could go unpaid. |
| Keep the file | Keep all payoff documents, discharge-registration documents, insurance policy updates, final mortgage statements, and tax-payment information. | You may need these documents for a title review, insurance-record correction, resale, or refinancing efforts. |
Should You Discharge The Mortgage From Title?
According to the FCAC, paying off your mortgage doesn’t end your lender’s rights, which are registered against your property’s title. To do this, a discharge updates the title at your provincial or territorial land registry.
| Choice | Possible reason | Question to resolve first |
|---|---|---|
| Discharge now | Discharging removes the registered charge your lender has against your home from your property’s title. If you’re planning to sell in the future or refinance, you’ll want the charge removed from title. | What are the lender, registry, and professional fees for discharging the mortgage? Who is responsible for filing the discharge of mortgage? |
| Keep the registered charge | You may not want to discharge the mortgage if you intend to keep or use a secured HELOC with your lender. | How much credit is left? Does the lender agree? What fees and estate implications apply? Discuss this with a lawyer. |
| Unsure | The mortgage balance is zero, but you’re unclear on documentation pertaining to the lending or the property’s title. | Before giving instructions to discharge your mortgage from title, you should request a copy of the details of the charge as registered on title from your lender and obtain legal advice specific to your province. |
Costs may include a discharge fee from your lender, which typically ranges from no charge to about $400 where there is no set maximum, and professional fees commonly between $400 and $2,500 for a lawyer, notary or commissioner of oaths. These figures are not specific to Ontario. Always get the costs in writing for your mortgage and property.
Verify That The Title Was Updated
A zero-balance statement is not confirmation that a change was made to the land records.
Authorized users register changes to Ontario’s land records, and ServiceOntario updates title information.
For a fee, you can search current records for a property on OnLand. These records can be complex; consider hiring a lawyer or other title professional to confirm that the charge has been removed from your title.
Read More: See How Title Insurance Works in Ontario
Do You Still Need Home Insurance After Paying Off The Mortgage?
Many types of events, like an earthquake or flood, may not be covered by a typical homeowner’s insurance policy, and predictable maintenance-related damage may be excluded. FCAC says some types of damage usually require additional coverage. Read your policy in its entirety to understand its terms, conditions, coverage, deductibles and exclusions before cancelling or reducing your coverage.
Although your lender may lift its insurance requirement once it releases its charge against your home, don’t cancel or reduce your homeowner’s insurance simply because the mortgage is paid off. Without a policy, you bear the cost of repairing or rebuilding the home, replacing stolen or destroyed possessions, and temporary housing after a loss. You also remain exposed to liability claims.
Read More: See What Dwelling Coverage Protects
What To Ask Your Insurer Or Broker
“My lender has confirmed that my mortgage is paid in full. What document do you need to remove the lender from the mortgage or loss-payee clause? Please send me the updated policy record and confirm whether this administrative change affects any coverage, premium, billing, or claim-payment instructions.”