Are you nearing the end of your home loan tenor? Or foreclosing the home loan? In any case, you need to know the process involved in closing a home loan.
Check the Steps to Close or Foreclose a Home Loan
Inform the lender:
The lenders have hundreds of loans running at the same time. Though, they have it in their records, but you’ll have to send a notice to the lender informing that you are closing your loan on a particular date.
Get all the paperwork:
Ensure you get all the paperwork, including the loan agreement and the receipts of EMIs paid. Having these documents handy will help us in a quick verification.
Assessment of payments:
Verifications related to payments and documents happen for closing a home loan. It is advised that the borrower be physically present for these verifications, as this will fasten the process.
Get an NOC:
Banks and NBFC’s issue a ‘No Objection Certificate’ on closure of your home loan. This certificate states that you have paid your entire home loan and there is no outstanding balance in your name. It is also called a certificate of home loan closure and you can go to this guide to get NOC for a home loan.
Remove Lien on the Property:
This might be an optional step. But if there was a lien to prevent you from selling your property, you need to get it terminated. The home loan is paid and the property is yours. It may take up to 10 business days to get this done.
Retrieve security cheques:
If you have submitted any post-dated security cheques with the lender, ensure you collect them when the loan is closed. The easier option here is having everything online.
Suggested Additional Read:
Foreclosing Your Home Loan? Check This First
Get a New Encumbrance Certificate (EC):
Once you close the home loan you can get an EC certificate, stating all the financial transactions related to your property. It also acts as a certificate that your property is free from any monetary or legal liabilities. This will help you sell your property in future.
Get the documents:
Retrieve all your documents submitted during the loan application. Especially in case of collaterals, retrieve the property documents.
Additional Read: Renovating an Apartment for Profit
Suggested Additional Read: Dos and Don’ts of Home Loan Foreclosure
Update your credit report:
Since the home loan is paid off, it should reflect in your credit report. Repaying a loan can have positive impact on your credit report. Ensure the information is updated.
Have track of loan repayments
It is essential to have a detailed record of your loan repayment after you have pre-closed it. Your bank account statements can act as an evidence for pre-closure. The statement will reflect the EMI payments made and the lump sum amount debited from the account towards pre-closure of the loan. In case you face an issue with the loan closure, you can always render your bank account statement as proof of repayment.
Procure legal clearance certificate from lawyer
A clearance certificate is an optional document that you can avail from any alleged lawyer. You will incur a nominal fee for the same. The certificate will lay testimony to the fact that you have full authority to sell off your property without any hindrance.
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