Key Takeaways
- A release of liability removes one person from the mortgage, but only with lender approval.
- It’s commonly used during divorce, property transfers, or when selling a share of a home.
- Alternatives include refinancing, selling the home, or mortgage assumption with a release.
A mortgage release of liability is a legal agreement that removes one person from a home loan — usually after a divorce or property transfer — but it only happens if the lender agrees.
In this article (Skip to...)
- What is a release of liability from a mortgage?
- When would you need a release of liability?
- How to get a release of liability
- Release of liability vs. mortgage assumption
- Alternatives to a release of liability
What is a release of liability from a mortgage?
A release of liability from a mortgage is a formal agreement with your lender that takes one person off the loan. It means they’re no longer legally or financially responsible for making payments or covering the debt if something goes wrong.
Check options for a mortgage release of liability. Start hereBasically, the lender agrees to let one borrower take full responsibility for the loan in the future. Once the release is approved, the person being removed is no longer liable for future payments, and it won’t hurt their credit if the remaining borrower misses payments or defaults.
However, this is not the same as removing someone’s name from the property title. Owning the home and owing money on the mortgage are two different things, and only the lender can take someone off the loan.
When would you need a release of liability from a mortgage?
- Divorce or separation: One spouse keeps the house, and the other wants out of the mortgage so they’re not tied to the loan anymore.
- Selling your share of the home: If you co-own a property and sell your part to the other owner, you probably don’t want to be stuck responsible for a loan on a home you no longer own.
- Transferring property to a family member: If you’re giving the house to a child or sibling, you’ll likely want to be removed from the mortgage so you’re not on the hook if they stop making payments.
How to get a release of liability from a mortgage
Here are the steps you’ll take to get a release of liability:
Check options for a mortgage release of liability. Start here- Contact your lender: Start by asking whether they offer a release of liability option, since not all lenders do. Ask about their process, what documents are required, and if there are any fees involved.
- Submit a formal request: Be prepared to fill out paperwork and explain why the release is being requested.
- Submit the paperwork: Your lender may require a divorce decree, proof of property transfer, or other legal documents.
- Financial review: The lender will want to make sure the person staying on the loan can afford to make the mortgage payments on their own, so they’ll need to prove their income and undergo a credit check.
- Lender approval: If the lender is satisfied, they’ll issue the release of liability and update the loan documents accordingly. Keep in mind that lenders don’t have to approve a release. They want to protect their investment, so if the remaining borrower can’t qualify on their own, the lender may deny the request.
Release of liability vs. mortgage assumption
A release of liability and mortgage assumption both involve changing who’s responsible for a mortgage, but they aren’t the same thing.
Check options for a mortgage release of liability. Start hereWhen you do a release of liability, one person is removed from the loan, but the mortgage itself doesn’t change. The loan terms, interest rate, and lender stay the same, but only one person is responsible for the payments.
In comparison, a mortgage assumption allows a new borrower to take over the existing mortgage. The new borrower has to qualify with the lender and officially take over the payments. Sometimes the original borrower gets released, and sometimes they don’t — it depends on the lender.
In summary, a release of liability removes a borrower from the home loan, while an assumption replaces them altogether.
Can you use a quitclaim deed instead of a release of liability?
A quitclaim deed removes your name from the title, but not the home loan, meaning you’re still legally responsible for the loan unless the lender grants a release of liability.
Alternatives to a release of liability
If your lender won’t approve a release, or the remaining borrower doesn’t qualify, here are some other ways to move forward:
Time to make a move? Let us find the right mortgage for you- Refinance the loan: The remaining borrower can refinance the mortgage in their own name, which pays off the original loan and removes the co-borrower.
- Sell the home: If neither borrower can afford the mortgage alone, selling the home and splitting the proceeds might be the best way to move forward.
- Mortgage assumption with a release: If someone else is willing and able to take over the loan, they can assume the mortgage, and you can request a formal release from the lender as part of the deal.
The bottom line
Removing someone from a mortgage isn’t always easy, but it can be done under the right circumstances. Whether you’re navigating a divorce or transferring ownership to a family member, your lender will be the key decision-maker.
Because the process can get complex, especially when legal documents are involved, it may help to review a more detailed guide that breaks down the full range of options for removing someone from a mortgage.
