After sincerely completing all the formalities of the home loan and timely payment of EMIs for a long time, you finally have a debt free home. Its home sweet home and it feels heavenly to have finally paid for it in full. But before you can sit back and relax, there is one tiny hurdle you must get through, which is your home loan closure. You have to complete this one last step.
Regrob is going to help you through it. From acquiring a loan to finally closing it, we are with you on every little step of this ladder that leads to your dream home. So let’s get going and know what the process of home loan closure is.
Getting back all the original documents submitted
Is all the payments done? Check. What is going to be next then?
Your lender, which may be your bank or a Housing Finance Company, must give back to you all the original documents. You should make sure that all the documents you submitted with the bank when taking the loan are returned. At the time of availing the home loan, the lender issues a List of documents submitted by the borrower. This list comes handy at the time of closure. You should recover each and every original document submitted by you. In fact, we suggest that don’t just check for documents alone. Make sure that all the pages are present in good condition as well. If you find that something is missing, you need to arrange for the missing page, which might be a bit of a tedious process. Make sure all the pages are intact in front of the bank official before signing on the acknowledgement of the bank. Because once you sign, you can’t undo it and banks usually won’t be responsive in this regard. It is suggested that you obtain the documents from the bank by visiting them than request documents by courier. This will ensure greater transparency and the chances of any mistake are reduced.
Get an NOC (No Objection Certificate)
The next step in the home loan closure process would be obtaining a No Objection Certificate from your lender. NOC or NC is a No Object certificate which is a clearance certificate from the bank or housing finance company. This states that the Bank does not have any more interest in the property and it is cleared by the bank after removing all hypothecation. When you get this make sure the NOC clearly mentions the Property details (like address etc.), name of the borrower, home loan account number, date of loan starting and closure, amount borrowed and repaid (some banks might not mention). Also a clause should be clearly mentioned that the borrower has paid all the dues and the property is now debt-free. This will make sure that the property is entirely yours now. You should be careful to check all these details so that your dream home is legally yours.
Remove Lien on property from Registrar’s office
What does Lien mean? Lien means “a right to keep possession of property belonging to another person until a debt owed by that person is discharged.”
Why should you be concerned? This is because in some cases where the credibility of the borrower is questionable, some banks might have created a lien. A lien is nothing but a transaction registered in the Registrar office which prevents you from selling the property. If no lien was created, then there is no issue. However, if a lien was created then it is important to have this lien removed. A bank official will accompany you to the Registrar office to terminate this lien. Remember that you will not be able to sell the property unless this is removed. A home loan closure is incomplete without this process. It will take 7 to 10 days for changes to reflect in the Registrar accounts.
Updating CIBIL database
Lenders do not show the same interest in updating CIBIL when loan is repaid as compared to when the loan is taken. Banks or finance institutions often delay or forget to inform CIBIL when a home loan is pre-closed. It takes 20-30 days to complete the process. Be in touch with your bank to make sure this is done. Once the bank informs that it’s done, get an updated CIBIL report to make sure it is reflected in score. This is important, so make sure you get it done. Click here to read about CIBIL SCORE and its effect on your home loan.
Obtaining legal clearance certificate from lawyer
A legal clearance certificate from a reputed lawyer is an optional attachment. It is up to you to get it or not, however, we suggest you get this as this will speed up your process if you plan to sell the house. It also helps to get a legal opinion to make sure the home loan closure procedure is indeed complete. So why not take a little extra effort?
Keep a detailed track of home loan repayments
It is wise to keep a track of your bank statement which reflects your Loan EMI. If you made any lump sum prepayments, keep a photocopy of the cheque/demand drafts. A handy tip is to maintain a file for all home related documents than put them in a cover. This will ensure that nothing important goes missing.
Obtaining a new Encumbrance certificate from the Registrar
Lastly, you must ensure that once the bank has provided the NC and removed any existing lien; apply for an EC in the Registrar Office. An EC is nothing but a document with all financial transactions performed on the property. Once the mortgage/loan is cancelled, it should be reflected in the EC. An EC is a very important document. So if the latest EC does not reflect closure of loan, approach the bank or Registrar for further process. And this will complete the home loan prepayment procedure.
So make sure you follow all the above mentioned steps for your home loan closure and you can live your life in peace.
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