Tag Archives: Home Loan

Are you going to close your house loan? All you have to do is this

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When you make your last home loan installment payment and close your home loan account, you probably feel a dizzying mixture of relief and joy.

As they say, “Patience is sweet when it sprouts.” When you eventually obtain sole ownership of your home, the effort of applying for a loan, gathering all the necessary paperwork, making the down payment, and finally paying the EMIs will all have been worthwhile. As you prepare to celebrate your debt-free home ownership with a grand celebration, make sure you comprehend and finish all the requirements for closing your home loan account.

Your Closing Your Home Loan Account Checklist 

Only when the lender makes the official declaration of account closure for a home loan is it considered closed? There are requirements to fulfill when settling your home loan account, so we have listed the things you should keep in mind.

  • Obtain Your Original Records 

Any lender you apply to for a home loan retains all your original documentation; all that is left are their photocopies. Make sure you request the return of all original documentation from the bank when it comes time to close your loan. Additionally, you must confirm that every document you receive is in good condition. The following is a list of documents you might need to get from your lender: 

  • Title deed
  • Sale deed
  • Authority to Act
  • Loan contract 
  • Letter of possession
  • Receipts for payments, etc. 

You must also notify your lender if the bank fails to send any submitted documents. 

  • Obtain the “No Dues” Certificate (NDC).

An NDC, sometimes called a “No Objection” certificate or NOC, is a document you’ll need to obtain from your lender as soon as you pay your house loan in full. An NDC proves that you have paid the lender all interest and owe them nothing more. As a result, the lender is no longer in control of your property.

The NOC must include details like the customer’s name, property’s address, loan amount, loan account number, and date of starting and closing the loan account. Making photocopies of the NOC is also advised to facilitate future transactions with other lenders. 

  • Get Your Property’s Lien Terminated 

Put simply, a lien prevents you from selling your property and grants the bank rights over it until your debt reaches you in full. The banks place a lien on your property, allowing them to sell it to recoup the loan balance if you default on the payments. 

Once you have paid off all of your EMIs and closed your home loan account, it is imperative to have the lien removed to enjoy full ownership of the property and the ease of a future sale. You and the lender’s agent must go to the registrar’s office to have the lien removed.

  • Obtain the Non-Encumbrance Certificate Update

You need to go to the Registrar’s Office and apply for a new Non-Encumbrance Certificate after you have paid off the entire loan balance and the lien has disappeared from your property. It is a legal document that includes thorough records of every financial transaction about the property.

  • Return the Security Cheques 

If you have given the lender podcasted security checks, remember to retrieve them when your home loan account is closed. 

  • Make Sure Your Credit Report Is Up to Date 

To Get unsecured loans, you must have a credit score or higher. For this reason, ensure that your lender updates this information to the credit bureau after you make the final EMI payment on your home loan. You must follow up with the bank regularly until you see the updated credit score, which typically takes a month to appear in your credit history. Additionally, you need to get any incorrect information that your lender may have inadvertently reported fixed as soon as possible. 

  • Monitor your loan repayments.

Get your loan history from the lender when your home loan pays off. It includes every significant payment you have made up to this point. Preserving a duplicate of the reimbursement account’s bank statements would be beneficial. The repayment history will be if you later disagree with the lender, credit bureau, or government agency.

  • Have your lawyer legally verify it.  

Getting a legal clearance certificate from a trustworthy lawyer is advised. When your home loan account is closed, a clearance certificate will confirm that all outstanding taxes have been paid. Getting this certificate is not required, but it will help you if and when you decide to sell your property.

Now that you understand the considerations to make during and after the home loan closing. Let us take a quick look at the closing of home loans. 

How to Close Your Account When Your Home Loan Is About to Expire 

If the final installment and all outstanding debts have been paid off: 

  1. Send a letter to the bank requesting the return of the original documentation you provided when applying for the loan. 
  2. You must include any additional documents you require in your letter, such as copies of invoices, etc. 
  3. The bank will typically respond to you within seven business days. 
  4. The lender will return your original paperwork and provide them with a closure letter stating there isn’t a balance owed. 
  5. Additionally, the bank will give you an NOC stating that it is no longer entitled to your possessions. 
  6. You must go to the Registrar’s office with the NOC and the bank representative if the bank has placed a lien on your property to have it removed. 
  7. In addition, the bank will promptly return the title deeds if it has yet to put a lien on your property. 

If one can’t afford a home, then they should not buy one!

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Journalists are misleading the home buyers, said the savvy second-generation developer, reclining on the deck of his corporate yacht, anchored off the Gateway of India, sounding truly concerned about the fate of middle-class Mumbaikars. With all sincerity, he explained how the prices of land have gone through the roof, how the cost of material has shot up and how even the labour cost has nearly doubled. Of course, he didn’t talk about increasing profit margins. “When all input costs are going up, how can the price of real estate go down? By writing reports that realty rates could go down, you are only delaying their decision. And finally, they will have to pay an even higher price for the delay,” the young turk clad in designer suit said, adding as an afterthought, “Do they have a choice?”

I think they do. The choice of not buying a home at all; the choice of renting it out! What does rising input cost and galloping interest rate mean to someone who opts out of the realty acquisition spree? Like this friend, who owns a 1BHK apartment in Seawoods, New Mumbai, and has for long been planning to move into a bigger home. A 2BHK apartment in the nearby Seawoods Estate costs upward of Rs1.4 crore and even after selling the existing flat, he would have to take a loan of Rs1 crore to move into his dream house — with a monthly instalment of at least Rs1 lakh dangling on top of his head like a sword. The monthly rent for the same apartment is just Rs20, 000 — a saving of Rs80, 000 every month, not to mention the pressure of servicing a gigantic loan. It would be a pity to buy your dream home, and lose your sleep over it.

In these days of fluctuating fortunes and unstable jobs, locking into a lofty home loan may not be the best idea and living on rent may well be a smart move. Leave aside complicated calculations and the conventional wisdom that realty prices only go up, and living on rent makes better economic sense too. Imagine paying a fat instalment for five years, and finding that the price of your flat has remained the same, or even worse, gone down by 30%. Live on rent and not only do you get to keep all that money which would largely make the interest component of your home loan, but you also have the flexibility of moving to a new address, or a new city.
Not that we are new to the concept of living on rent. A good percentage of the population in the west lives on rent, as did a good percentage of Mumbaikars too, till just 25 years ago. Very few people had the resources to buy a house, and one’s own home was a result of a lifetime of hard work. The rest rented it out, and home loan companies did not even exist.
Should every Mumbaikar make the choice of living on rent, the young Turk on the yacht has a lot to worry about  not only about repaying his creditors, but also the fat installment for that anchored yacht!

 

SBI May Give Reason to Cheer

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Bank to every Indian
Photo by RamNMarch 25, 2010

After the budget 2010, SBI brings a gleam of hope for home loan borrowers as it plans an extension in the home loan relief plan.

SBI, the State Bank of India, one of the largest lenders in India, has indicated that although there would be slight changes, but it may still consider continuing its much-talked-about 8 % home loan scheme. One of the top officials of SBI said that even though they bring modifications in their products, which tune with their liquidity position normally they don’t kill any product. However, the banking major have not yet formally announced the extension of the bid whose tenure gets over on March 31.

The corporations like ICICI Bank and mortgage lender Housing Development Finance Corporation which are the major competitors of SBI also copied this scheme of SBI but later withdrew them because the RBI disapproved such products and drying liquidity.

But according to the officials it is one of the best home-loan plans in the market since it assisted other sectors to grow like cement and steel. It is a very successful offer. It also tremendously contributed to the overall economic growth.

However, the ‘teaser’ schemes were not liked by the Reserve Bank since it was related with the ability of customers to pay the rates of interest when it got back to the usual level after the period of this scheme expires.

RBI Deputy Governors, Usha Thorat and K C Chakrabarty, had openly expressed their concerns about the scheme. “Teaser rates…

Checklist for NRIs Willing To Invest In Real Estate

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1. Doing a bit of research on the track record of builder can help.

2. For any real estate purchase it is preferable to make visits to the sites before buying them. This exercise is worth it not only because we are committing a large amount of money but also because reversing the decision proves costly as well. If the NRI is not able to make it, he can request a trusted friend or relative to opt for the site visit.

3. Going for a home loan through a bank will ensure that the money is released in stages only. This keeps the money safe during the construction. Also, all the banks at their local branches have their list of shortlisted builders for whose constructions loans are pre-approved. It is better to buy only these constructions, as the banks are quite stringent in their norms for pre-approval and shortlist only those builders who have a proven track record and those project, which comply to all legal norms.

4. Post the construction, the management of the asset is one of the major issues faced by NRIs. There is no easy solution for this. There are some society associations which support the owners of the buildings with services like maintenance and rent collection. There are again the “friendly neighborhood real estate agents” who may some times double up as the maintenance manager too. Many times though the “friendly” turn into “greedy” after some time. There are a few professional real estate management firms in most metros, which are now expanding into the Tier-II cities too.

5. Some of the other checks for any real estate purchase are:

i. Whether the construction rate quoted is for Built-up area or Carpet area? Construction is generally quoted for built-up area and rental is quoted only for the carpet area. There can be a difference of 15 % to 20% between the two based on the type of construction. Today in apartments there is the concept of super built-up area which apart from the built-up area includes stair case, common passages, fire escape passage, etc. The super built-up area can be bloated by as much as 50% of the carpet area.

ii. Robert Allen, the Real Estate Mogul suggests the 100 – 20 – 10 – 1 rule for any real estate purchase. The idea is to check out 100 properties in person; shortlist 20 of them for a deeper scrutiny; enter into negotiation with sellers for 10 of the properties and finally buy the ONE that is best suited.

iii. Technically there should be a check for all the statutory approvals – town planning, water supply and sewage disposal, safety approval from the local fire department, etc. It is always better to ask for the encumbrance certificate and the title deed from the builder to get a legal opinion from a lawyer.

6. Don’t hesitate to ask. This is probably the most important point. Many times, for avoiding being thought of as less intelligent, we question less. For any investing and particularly for real estate the more the questions asked the better the investment. The genuineness of the promoter can be gauged by the patience, the promptness and depth of the answers. Answers like, “Don’t worry about that, we will manage”, without going into the specifics are danger signs.

7. Take time. Do not restrain yourself by limiting the time for checking the properties and decision making to the time that you are present in India. A 2-4 week holiday cannot be hoped to be converted into a real estate investment period. Start the process before you come here. In case you cannot decide before you leave, it is OK. A Power of Attorney to a parent or a relative can be used to decide on the actual purchase even after you leave the shores of India.

Real estate- the best investment destination

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The economic slump had a major impact on real estate. The price has come down over the last few months. People with a huge disposable income can explore investing in real estate for diversification of their assets. Reduced home loan interest rates and lower property prices makes it an opportunity hard to resist.
Some investments are considered safe in times of recession like precious metals and foreign currencies. In this list of investments that are popular during times of financial insecurity, real estate can be included.
Real estate is considered a hedge against forces of inflation. Inflation has led to the rupee value depreciating and property prices travelling upwards. Property investments are usually held over a long term.

Residential property becomes cheaper

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Home Loan
Photo by thisperthlifeResidential property prices are expected to fall by about 10% this year. Residential property rates declined by 18% to 20% in this March. Despite this drop, buyers are watching market scenario with ‘wait and watch’ policy. This trend is likely to continue through 2009. Mr. Sudhir Nair, Head, CRISIL Research says, “Demand in the commercial and retail segment is likely to remain under stress for the next two years owing to excess supply and weak off take.”

It is believed that lower home loan interest rates would help to revive demand in the residential segment. Hence, capital values are likely to stabilise in the first half of 2010, and increase during the second half of the year.