If you are nearing the end of your home loan tenor or thinking about foreclosing the loan, here is how you can go about doing just that.
Follow these simple steps to foreclose your home loan
1. Inform the lender
Lenders have hundreds of loans running simultaneously. Though they have it in their records, you will have to notify the lender, informing them that you are closing your loan on a particular date.
2. Get all the paperwork in order
Ensure you get all your paperwork in order, including the loan agreement and receipts of EMIs paid. Having these documents handy will help us speed up the verification process.
3. Assessment of payments
Verifications are related to payments and documents taken place while closing a home loan. It is advised to be physically present for these verifications, as this will fasten the process.
4. Get a NOC
Banks and NBFC's issue a No Objection Certificate (NOC) on the closure of your home loan. This certificate states that you have paid your entire home loan, and there is no outstanding balance against your name. It is also called a certificate of home loan closure. Read more about NOC for a home loan & its importance.
5. Remove Lien on the property
This might be an optional step. But if there's a lien to prevent you from selling your property, you need to get it terminated since the home loan is paid for, and the property belongs to you. It may take up to 10 business days to get this done.
6. Retrieve security cheques
If you have submitted post-dated security cheques with the lender, ensure you collect them when the loan is closed. The easier option here is having everything online.
Additional Read: Foreclosing your home loan? check this first
7. Get a New Encumbrance Certificate (EC)
Once you close your home loan, you can get an EC certificate stating all the financial transactions related to your property. It also acts as a certificate stating your property is free from any monetary or legal liabilities. This will help you sell your property in the future.
8. Retrieve the documents
Get back all the documents you submitted during the loan application. Especially in the case of collaterals, retrieve the property documents.
9. Update your credit report
Once the home loan is paid off, it should reflect on your credit report. Repaying a loan can positively impact your credit line, so ensure the information is updated.
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