Direct answer first:
When you accept a cash offer and sell your home in Canada, your existing mortgage, HELOC, and any other registered liens or charges on title are paid off in full from the sale proceeds on closing day. Your lawyer, notary or chosen legal representative handles the entire process.
The buyer receives clear title. You receive whatever equity remains after the payouts, penalties (needed repairs, fixes, cost of moving left-behind items), discharge fees, legal costs, and any other adjustments like service fees from the cash home buyer in question.
You do not keep the mortgage, transfer it to the buyer in a standard cash sale, or continue making payments after closing.
This is the same fundamental process whether you sell to a traditional buyer with financing or to a cash buyer such as Cash Offer Canada. The main differences with a true cash offer are speed, certainty (no buyer financing contingency), and the ability to choose a flexible closing date.
Why this matters so much to Canadians right now
Most Canadian homeowners do not own their homes free and clear. Selling with a mortgage (or HELOC) is completely normal. The process is designed to protect the buyer (who must receive clear title), the lender (who must be paid), and you (who must receive your net equity cleanly).
When done properly through a reputable cash buyer and your own real estate lawyer or notary, it is a routine, transparent, and low-drama process.
Step-by-step: Exactly what happens
1. You accept the cash offer
The agreement of purchase and sale is signed. Closing date is set (with a cash buyer this can often be as little as 7–30 days, or longer if you need time — up to 90 days in many Cash Offer Canada deals).
2. Your lawyer/notary opens the file and orders a title search
This reveals every registered charge: first mortgage, HELOC, second mortgage, judgment liens, CRA liens, builders’ liens, etc.
3. Payout (discharge) statements are requested
Your lawyer contacts every lender or lien holder and requests an official payout statement for the exact closing date.
- The statement includes:
- Remaining principal
- Accrued interest to the payout date (interest runs daily)
- Prepayment penalty (if the mortgage is closed and you are breaking the term early)
- Discharge/administration fee (commonly up to a few hundred dollars; some provinces regulate the maximum)
- Any other amounts owing (tax account shortfalls, etc.)
- Important for HELOCs: Tell your lawyer immediately if you have one. Do not draw additional funds after the payout statement is issued — it can cause delays or force a new statement.
- On closing day
- The cash buyer’s funds arrive in your lawyer’s trust account.
- Your lawyer pays the lenders and lien holders first (mortgage → HELOC → other registered charges, in priority order).
- The lawyer registers (or undertakes to register) the discharges/releases so the charges come off title.
- Remaining funds (your net equity) are paid to you, usually by wire or certified cheque, often the same day or within a short period after any required holdbacks clear.
- After closing
- Your mortgage and HELOC are paid in full and closed.
- Monthly payments stop.
- The discharge is registered on title at the provincial land registry (timing varies by province and lender — sometimes same day, sometimes days or weeks later). In some provinces lawyers hold a small amount of funds until the discharge is confirmed registered.
- You receive a final accounting from your lawyer showing every deduction.
Special cases you need to understand
HELOC (Home Equity Line of Credit)
A HELOC secured against the property is treated almost identically to a second mortgage. It must be paid to zero and closed so the security can be discharged. You cannot keep the HELOC open after the sale in a normal transaction. If the HELOC is with the same lender as the first mortgage, the payout statement usually covers both.
Prepayment penalties
Most Canadian mortgages are closed. Breaking them early triggers a penalty:
- Variable-rate: usually 3 months’ interest.
- Fixed-rate: the greater of 3 months’ interest or the Interest Rate Differential (IRD). IRD can be substantial if rates have fallen since you locked in. Request the exact number from your lender early. It is deducted from your proceeds.
Multiple charges / priority
Charges are paid in the order they appear on title (first mortgage first, then subsequent charges). If total secured debt exceeds the sale price, you have a shortfall and must cover the difference from other funds (or the deal may not proceed unless the cash buyer and lenders agree to something unusual).
CRA liens, judgments, or other non-mortgage liens
These must also be paid from proceeds (or otherwise cleared) before clear title can pass. A cash sale can still close, but the net to you drops accordingly.
Negative equity / shortfall
If what you owe exceeds the cash offer price (after service charge and costs), you will need to bring money to the table on closing or the transaction cannot complete in the normal way. This is one reason transparent cash buyers stress realistic valuations early.
Assumption or porting
In a standard cash offer to an investor/iBuyer-style buyer, the mortgage is almost never assumed by the buyer and is not ported. The mortgage is simply paid out and discharged. Assumption requires lender approval of the new borrower and is uncommon in pure cash deals.
How this works specifically with a cash buyer like Cash Offer Canada
Cash Offer Canada, part of the group founded by long-time realtor AJ Hazzi, buys with its own funds. There is no buyer mortgage contingency that can fall through. The process still requires a lawyer or notary on both sides, a title search, payout statements, and discharges — exactly as described above.
Cash Offer works with a transparent 10% service charge that covers market risk, holding costs, costs of selling, etc.) — check our fees page to see our average $6,500 service charge.
You remain responsible for your own legal fees, any mortgage prepayment penalties, discharge fees, and repair credits if agreed after inspection. Everything is laid out so you can calculate approximate net proceeds before you commit.
Because closing can be fast and flexible, the coordination of payout statements and discharges is often smoother than in a traditional deal that stretches over months.
Practical checklist for Canadian sellers
- Tell the cash buyer and your lawyer about every mortgage, HELOC, and lien early.
- Request approximate payout figures (including penalties) from your lenders as soon as you are serious.
- Do not draw on the HELOC after the formal payout statement is issued.
- Ask your lawyer about any holdback related to discharge registration in your province.
- Get a written statement of estimated net proceeds (sale price − mortgage/HELOC/liens − penalties − discharge fees − legal fees − service charge − adjustments).
- Confirm the exact wire instructions and timing for receiving your equity.
Provincial notes (high level)
Processes are similar across Canada but land registry systems and exact terminology differ (e.g., “discharge” vs “radiation”/mainlevée in Quebec). Your local real estate lawyer or notary knows the precise electronic registration rules for Ontario (Teraview), BC, Alberta, etc. Always use a licensed professional in the province where the property is located.
Bottom line for people who need clarity and speed
Accepting a cash offer does not leave your mortgage floating or create mystery. The debt is paid, the charges come off title, and you walk away with your equity (whatever remains after legitimate costs). The system is designed to make this clean.
When the buyer is paying true cash and the process is handled by experienced professionals, the main variables you control are the offer price, the closing date, and how thoroughly you understand the deductions in advance.
If you are facing time pressure, financial stress, an inherited property, a divorce, or simply want certainty, knowing exactly how the mortgage and liens are handled removes one of the biggest sources of anxiety. Request the numbers early, work with a good lawyer, and the path from accepted offer to money in your account becomes straightforward.
This is the process that protects Canadian homeowners every day. Use it with your eyes open and you keep control.