The 19-year-old Schmeichel, son of Peter, is now hoping to push for first-team football - be it at City or elsewhere.
"I've just got to keep working hard now," he told City's website.
"Hopefully now I can get a few games out on loan and a few first-team games where there is real pressure on.
"The aim is to get into the first team here, but for the moment I just need to get some games. It's all about development and I'm still young in keepers' terms so I need to keep developing in the immediate future."
City boss Stuart Pearce has confirmed he will not be offering Qatar international Hussein an extension to the short-term deal he signed in the summer.
The 21-year-old midfielder made just one sub appearance for City in the League Cup exit at Doncaster, and will leave at the end of the month but is hoping to stay in England.