Creating a payoff letter is essential to any loan or mortgage repayment process. Our free templates and this guide can help you get started.Use this letter to help you negotiate a full and final settlement offer with your lender. A mortgage agreement is a legally binding contract outlining the terms and conditions of a mortgage loan between a lender and borrowers in a specific place. Learn all about redemptions and switching mortgages hassle-free. Find clear guidance and resources to make informed decisions for your financial future. A mortgage payoff letter can come in two forms. One form tells borrowers the remaining principal amount and interest they have to pay to close out the loan. What is a Payoff Letter?