Home financing is one of the most popular methods used to purchase real estate. The joy of being a property owner is often realised after the loan has been repaid in its entirety. If you are nearing the end of your home loan tenor, the chances are that you are not sure at all how to go about closing your home loan. Here are some tips on how to close your home loan easily.
Obtain your NOC
When you close out a home loan, you need to contact the lender and make sure that they send over your no dues certificate (or NDC and/or NOC). They will send the certificate to your address. The document will show you which details are relevant to your loan, such as how much money was initially borrowed, what property that money was used for, etc.
The idea behind the certificate is that if the lender wants collateral from you in the future, you can show this document to prove that the loan has been repaid in full and all outstanding dues have been settled.
All of these details must be spelt correctly to avoid confusion down the line and protect yourself and your property from potential risks. Also, make sure the NOC specifies that the property (or properties), in addition to its title deed, belongs solely to you and that the lender (and their officials) no longer has any authority over it.
Claim your Original Documents
After the successful documentation of the loan, you should always remember that you must keep all documents safely with you. The banker may provide a list of LOD (List Of Documents), and these must be provided by you during loan application. This list includes bank account statements, property papers, possession letters, income proof, deed of sale, etc. All documents must be returned after the final settlement.
Paperwork can often be tedious to deal with. However, it’s also very important. If you’ve ever had to take out a loan, you should be familiar with the fact that putting a lien against your property is often necessary in order to make sure the lender is made whole if something were to happen and you ended up defaulting on your payments.
Lenders do this to protect themselves from incurring losses over unpaid debts, but it can lead to other issues later down the line if not handled properly. Lenders who place liens on someone else’s property are legally required to notify them about it once it’s done, so they have the opportunity to rectify the situation.
Collect Security Cheques
If you have given any post-dated security cheques to the lending institution during the closing, make sure to collect them when the loan is closed. This is crucial to ensure you get your collateral back.
Obtain Encumbrance Certificate
An encumbrance certificate is a legal document that shows that there are no other claims on the property except for the mortgage attached to it. This certificate will expire upon repayment of the loan that has been disbursed to you. Procuring this document from the sub-registrar’s office validates the ownership status of your property and removes any liabilities attached to it. This comes in handy if you wish to sell off your property at some point after procuring this certificate, as potential buyers may not look forward to buying a property with an existing debt placed on it.
If you have any questions about how to close a home loan, you’ve come to the right place. After you’ve paid off your home loan in full, make sure you settle any outstanding issues and collect all the important documents.