1

Getting a new mortgage can involve a lot of paperwork and take considerable time.

If one (for whatever reason) happens to have an existing mortgage that has been fully paid off but never officially discharged, can that mortgage be easily reopened to get a new loan without having to go through the original application process all over again?

(Note that this is specifically about Canadian banks, but answers applicable to other countries are welcome too.)

Improve this question
6
  • 2
    How does one end up with a mortgage that is fully paid off but not officially discharged? I don't understand what that would even look like-- the bank has a lien on your house that never got removed despite you paying off the balance of the loan? Or something else? Realistically, no matter what, the answer to the underlying question is going to be "no" but the "why" may depend on exactly what situation you're envisioning.
    – Justin Cave
    Commented Aug 11, 2020 at 14:14
  • 1
    @glglgl - Because if the existing mortgage has been fully paid off, there is no longer a mortgage. And "re-opening" a mortgage doesn't make sense-- if the bank is going to give you a new, large check, they're going to want new documentation that you're a credit-worthy borrower and that the house is worth enough to justify the loan. That's going to involve both time and paperwork.
    – Justin Cave
    Commented Aug 11, 2020 at 15:26
  • 1
    @JustinCave, "the bank has a lien on your house that never got removed despite you paying off the balance of the loan?" Exactly. We paid it off years ago and never thought about it again. Then recently we were dealing with another bank that discovered a lien on the house as the mortgage was never discharged. The original bank is investigating (but apparently it's so old that they don't even have any online records, so it will take a while). I asked this question in case there really was a way to take advantage of the situation (i.e. avoid the inconvenience of income investigations etc.).
    – Ray Butterworth
    Commented Aug 11, 2020 at 15:47
  • 1
    @JustinCave easy: the bank flunky responsible for going to the county courthouse and telling "them" that your mortgage has been paid... doesn't do that.
    – RonJohn
    Commented Jan 8, 2021 at 17:13
  • 2
    Old UK anecdote: some years ago (possibly late 80s/early 90s) some relatives were advised not to completely pay off their mortgage (I think perhaps leaving £50 or £100 owing) as – should the need arise in the future – it would be easier to take money out of an existing mortgage (roughly equivalent to a HELOC in the US?) than to start afresh. Whether that is still the case, I don't know.
    – TripeHound
    Commented Jan 9, 2021 at 16:21

2 Answers 2

Reset to default
1

As you asked about other countries:

In Germany, if your bank as a mortgage on your house, it can be used as a security for other loans as well.

Assume your house's value is 150000 €, and after several decades, you have managed to pay off 130000 €, it is very possible that, if you need a loan, be it for repairs or for ther purposes, you can get a loan secured by the house.

Improve this answer
1
  • This is because while the mortgage is an accounting trick (i.e. something the bank can make internally fast), the REGISTERED DEBT is on the bank, and not on the mortgage (i.e. the bank can use the existing debt entry on the property for other debt).
    – TomTom
    Commented Aug 11, 2020 at 15:22
0

If one (for whatever reason) happens to have an existing mortgage that has been fully paid off but never officially discharged, can that mortgage be easily reopened to get a new loan without having to go through the original application process all over again?

In the united States the lender would have to reevaluate your financial situation, and make sure that there is no liens on the house.

Some lenders while you have a mortgage with them can quickly approve a refinancing of the mortgage. But they would be hesitant to do so if there was a break.

They need to know that you currently have the income to payoff the new loan; they need to know that your other debts aren't too big; they also need to know that your credit history hasn't gotten worse. They will still need an appraisal of the collateral and a title search and maybe even a new title insurance policy.

I doubt it would save a lot of time.

Improve this answer

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .