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