Humber/Ontario Real Estate Course 4 Exam Practice

Which right does a homeowner have upon fulfilling all mortgage covenants and payments?

1. Automatic discharge with mortgagee-paid fees

2. Required mortgagee consent for discharge

3. The right to a formal discharge

4. Mortgagee demands interest penalties

5. Obligation to pay the remaining interest

6. Right to renegotiate terms with the lender

The correct answer is: The right to a formal discharge

The correct answer is the right to a formal discharge. When a homeowner has fulfilled all mortgage covenants and payments, they have the right to receive a formal discharge of the mortgage from the lender. This document serves as official acknowledgment that the mortgage debt has been fully paid and that the lender no longer has a claim against the property. This step is essential for the homeowner to clear the title of the property and to confirm that they fully own the property without any encumbrances related to the mortgage. Upon completion of all obligations under the mortgage agreement, a homeowner effectively nullifies the lender’s interest in the property. The formal discharge is necessary to ensure the homeowner can sell or transfer the property free from any mortgage claims and provides peace of mind knowing the obligation has been satisfied. Context about other options highlights that not all scenarios involve additional fees or complications. Homeowners do not generally need to seek consent from the mortgagee for discharge once all terms have been met, nor are they subject to interest penalties at this stage. The obligation to pay remaining interest or to renegotiate terms arises only in situations where the mortgage is still active, not after fulfilling all the requirements.