Home loans are secured loans that allow people to borrow money to construct, renovate or purchase a home. Over a predetermined length of time, the borrower repays the loan balance in equal monthly payments. Home loans in India are available for duration of 15 to 20 years; however, if you want to pre-close a home loan before that time, you must notify the bank in writing.
To prevent any future complications, after the borrower has paid off the last premium and interest through EMIs or pre closed the loan, it is important to keep few factors in mind.
No Objection Certificate from the lender
NOC is a formal document that the lender issues attesting to the borrower’s full repayment of the loan balance. The lender’s stamp on this official document ensures that the entire loan balance has been paid off and that there are no outstanding balances.
Always double-check that the loan account number, borrower name, property details that the loan was taken out against, and loan closing date are all spelled correctly when collecting the NOC from the lender.
Ask for all the property documents
While closing your home loan ensure that you take back all the documents submitted to the lender at the time of availing the home loan. Getting the paperwork is essential if you want to transfer the property or avail a loan against it later.
Since there is a chance that the documents could be misplaced, it is best to always pick up the paperwork straight from the bank rather than through a courier.
Possession letter, original sale deed, power of attorney, original conveyance deed, payment receipts, and so forth are a few examples of these documents.
Obtain the ‘’No Encumbrance Certificate’’
An Encumbrance Certificate is a legal document that verifies the ownership rights of a property. This document is required at the time of applying for a home loan.
When applying for a home loan, this document is necessary. Request a “No Encumbrance Certificate” when closing a house loan, since this guarantees that your property is free from financial or legal obligations without any obstacles from the lender.
You can present the buyer with the “No Encumbrance Certificate” if you ever want to sell the property.
CIBIL report is updated with a closed entry
All of the entries and payment records pertaining to your loan are included in a CIBIL report. Prior to making a house loan offer, lenders first review the borrower’s CIBIL report.
Banks update the item with the precise date of home loan closure by adding “Date Closed” at the time of closure. But occasionally, banks could neglect to update the entry, which could cause problems for you if you ever want to sell your property.
Get the Lien terminated from the registrar
A lien indicates that, should you be unable to repay the full amount owed on your home loan, your lender will have the right to sell your property in order to recoup the unpaid balance.
To prevent any legal problems with your property ownership after the loan is closed, make sure to have this lien removed from your local registrar’s office.
