CBA discharge authority – Get it here and know it’s power

What is a CBA discharge authority?

You need to complete a CBA discharge authority when you are doing something with your home loans that affects how your home loan is currently secured—like selling.

There are several interchangeable terms used for the same process. I list some ways lenders describe “discharge authority” from my own mortgage broking experience:

• Discharge request
• Release security
• Release form

A typical reason for using a discharge authority is when borrowers are selling their property. The CBA discharge authority tells the lender about the transaction so they can advise you, the borrower, what home loans need to be cleared as part of the sale. This will allow CBA to remove the mortgage from your property – so the property can be transferred to the buyer.

Basically, a CBA discharge authority gets the process started – even if there are incomplete areas on the form it should prompt a call to clarify (in the case of a sale) or perhaps retain your business (in the case of a refinance).

CBA discharge authority – Maybe they want to keep you?

As a mortgage broker, I have lost count how many times CBA has turned around borrowers who have signalled their intent to leave them with a discharge authority.

These days CBA prefers anyone considering a refinancing for a better rate call them directly, a process than can see a much improved rate for borrowers.

If you are only refinancing for a lower rate and want to challenge CBA first, then see my Insider’s Guide below on how to ask for as better rate.

Or want to find the CBA discharge authority. Here it is:

Link – CBA discharge authority

Full discharge vs Partial discharge

A full discharge is typically where the property that secures the home loan is being refinanced or sold. This usually sees any home loans associated with the property at that lender fully paid out at settlement.

A partial discharge is where more than one property is securing a home loan. When one property is being release, it is referred to as a partial discharge. This may involve valuations and possibly reducing some home loan limits to ensure the bank is not over-exposed when the property is released.

Do I need a CBA discharge authority?

You need a CBA discharge authority when you are doing something to affect the security structure of your home loans. If in doubt talk your mortgage broker or solicitor.

This differs to changing your home loan products, like splitting a home loan or adding and offset account.

Here are some reasons a CBA discharge authority might be used:

Selling

Selling your property means that your need to transfer your property to the buyer. If the property has been used to secure any home or business lending, this needs to be addressed as part of any sale. Commonly, home loans are paid out with sale proceeds to enable a sale to proceed. The CBA discharge form addresses what home loans you would like paid out as part of the process.

If unsure, you can contact your mortgage broker or CBA directly.

Insider tip: The process of selling a property in Australia is often bound by deadlines. Missing them can lead to significant financial penalty.
Keep your mortgage broker or lender close and do not leave it too late to commence the CBA discharge authority process.

Refinance for a lower interest rate

If you are using a CBA discharge authority to refinance for a better rate, make sure you check if you are on the best rate. If not? It could be time to convince them you are worth it.

Instead of completing a form, CBA actually wants you to call them on a special number, so they have a chance to keep your business. It is a great opportunity to negotiate a lower rate if this is the reason you are considering leaving them.

It might surprise you to know that Australian lenders are putting a lot of effort into retaining customers by offering better rates to prevent them refinancing.

Insider tip: If you are chasing a better rate from CBA make sure you see my guide on how to ask your lender for a better rate.

I have seen on multiple occasions that borrowers are enticed to stay only after they have initiated the discharge request. I guess lenders know you are serious when they receive an official notice of your intent to leave them.

Refinance – General

A refinance home loan involves moving your home loan from one lender to another. And so, the property that secures the home loans also needs to move lenders.

For a refinance home loan, leaving your old lender and starting with your new lender all happens on the same day.

The CBA discharge authority has a section asking you which bank you are going to and who they can contact about this.

Insider tip: Including your mortgage brokers details on the CBA discharge form can be particularly helpful. In my mortgage broking experience, having my contact details on the CBA discharge authority has helped when the lenders have finance-specific questions I can answer promptly so as not to slow down the discharge process.

Substitution

A substitution, also known as a “security swap”, Involves changing the current security but keeping the home loans more or less the same. Some lenders are open to substituting an existing property with another property, or perhaps a cash term deposit.

In these cases, borrowers want to keep their home loan and do not pay it off. The CBA discharge form tells the lender what else the borrower would like to use as security instead.

This does not always need to involve a sale. It could be part of a bigger strategy around what properties are used for home loan security.

Insider tip: Don’t always close a loan because the lenders has been suggested to you! Make sure it aligns with your objectives. In my experience, substitution has seen investment home loans stay open that would have otherwise closed automatically. This means the borrowers would have lost any future tax deductible benefits the home loan was going to give them.

Loan paid off

Paying off your home loan may sound like a pipedream for many, but in my lending experience, I have seen many borrowers pay of their home loans. It is very possible.

In fact, I explain many ways you can pay off your mortgage faster to reduce your loan term in my article.

Once you pay off your home loan you have a couple of options:

• Do nothing. The home loan may automatically close. The property remains secured by the lender as they will still have a mortgage over it.
• Request the lender remove the mortgage from your property title, in which case you need to complete a CBA discharge authority.

Insider tip: Many homes loans will automatically close when the balance hits zero – usually a cause for celebration.
But consider whether you want to keep some flexibility, with funds in redraw or offset accounts, in case you need them later on—without a home loan application.

Removing a guarantor

There are many reasons for a guarantor home loan. The one I am referring to here is a family guarantee where, in the absence of a large enough deposit, a family member offers their property as extra security for a home loan – in addition to the one being bought.

When a borrower has enough equity, they can remove the guarantee. When it comes time to remove a guarantor, a CBA discharge authority is needed to tell the lender that family help is no longer needed. This is a good example of a partial discharge.

Insider tip: You could engage your mortgage broker or lender as a first step to conduct equity calculations, including performing a CBA valuation. It should not involve a new home loan application.

Subdivision

A subdivision is where a parcel of land is divided into two or more lots. Sometimes there is no subdivision, just a change of title type.

These type of title changes affect the underlying security propping up a home loan. So, a CBA discharge authority is often needed as part of the process.

Insider tip: In my home loan experience the CBA discharge form is just the start of a bank process. There is a free form notes section where you can explain what you are trying to achieve, and they can advise what will be needed on their end. Use professional advisors on your side to guide you.

How does a CBA discharge authority work?

1. Complete online CBA discharge authority
2. Sign it
3. Send to bank

The lenders job is to fulfil your wishes, so make sure you know what you need. They do not have to consider any of your investment needs, goals or objectives when doing this.

Insider tip: DO NOT assume if a bank officer calls you back to clarify your instructions that they understand your interests. They are not obliged to.
You need to understand what your instructions are telling the bank to do – seek advice from a mortgage broker.

What are the fees for a discharging authority?

The CBA discharge authority itself does not carry any application fees for submitting the request.

However, once the discharge is approved and processed there will likely be fees. Some fees and charges to consider are:

Security-related fees

Discharge fees
Bank and solicitor fees are often charged for preparing the discharge. These are typically in hundreds, as opposed to thousands of dollars.

Mortgage registration fees
These are government registration fees which relate to mortgages over property.

On the other hand, there can be home loan-related fees. These are related to the home loan product as opposed to the mortgage that the lender registers over the property.

Home loan-related fees

Accrued interest
In the case of a refinance or sale don’t be surprised if your payout figure is higher than the loan balance. Interest adds up daily but is only billed monthly so the lender makes sure they charge for any unpaid interest before they release a property at settlement.

Fixed rate penalties
If you are paying out a fixed rate home loan prior to the expiry of the fixed rate there can be significant fees.

Other fees
Discharge authorities cover a myriad of requests than can attract a fee. A substitution request is one example that will likely attract a fee.

If you are curious about the type of fees applicable to your situation, contact a mortgage broker or lender. Many of these fees may also be listed in your original loan offer.

CBA discharge authority

If you are only refinancing for a lower rate then try my step by step guide to asking for a lower rate. A discharge authority is a great place to find the right people to talk to.

Here is the link direct to the Commbank discharge authority.

Key considerations

There a too many discharge scenarios to cover, that is one reason why banks are so big!

Instead, I have provided some key considerations, based on my mortgage broking experience, for anyone going through a discharge process.

Home loan vs Business customer

Just selling your home? It may sound simple enough but if you have a business do not be surprised if your property has been used somewhere along the line to help with business funding. Engage your mortgage broker or business banker before your sell so you can plan ahead.

Multiple properties

There are different ways to secure a home loan. Sometimes one property is used, and other times multiple properties are used.

Are your properties crossed or standalone? This can have significant ramifications for a discharge process.

One implication for a partial discharge is that your need to understand which loans need to be paid down as a condition or releasing the property – discuss this with your mortgage broker early in the process. You would not want to pay down a tax deductible debt by accident.

Conversely, you may have plans to use some money from the sale in which case you may be able to retain some funds from sale – and keep some of the loan open, and useful. It is often easier to keep a loan than apply for another one, provided it still meets your needs and objectives.

FAQ’s

Who needs to complete a CBA discharge authority?

If you are a borrower or guarantor for a home loan, then it is likely you will need to sign off on any CBA discharge authority. The process is not limited to individuals, there can be other types of borrowers and guarantors as listed:

• Individuals
• Companies
• Trusts

When do I need to complete my CBA discharge authority?

In the case of a sale or refinance, usually about three weeks prior to target date. You should check processing times with the lender.

How long does a CBA discharge authority take to process?

Normally about two weeks, but it can be longer or shorter depending on complexity.

How do I get hold of a CBA discharge authority?

Here – CBA discharge authority

Final word

The CBA discharge authority can be a powerful tool.

It can enable many changes to your lending structure without the need for a traditional home loan application.

In the case of a refinance, it gives the lender one last opportunity to keep your business – something that I have seen many borrowers use to successfully negotiate a lower rate.

Importantly, the CBA discharge authority is a formal instruction to the lender. Make sure you understand how to complete it. Consider carefully, any lender suggestions that arise during the process. Although time deadlines might be a factor, this is now time for hasty and uninformed decisions. Use professionals to assist you so you can make changes that align wit your goals and objectives.

If you need advice I can always find you a licensed professional to guide you through the process.