Want To Pre-Close Your Home Loan? Have These In Order
The feeling of having repaid your home loan is very satisfying. A home loan agreement may be a contract of 30 years but you always have the option to close your home loan early and free yourself from the obligation of paying instalments every month.
But in the excitement of pre-closing your home loan, it is possible to forget to collect important documents.
MakaaniQ tells you what you need to pay attention to while executing an early closure of your home loan.
- Get all your original documents
Once you pay all the equated monthly instalments (EMIs) and close your home loan, the bank or a financial institution will return all your original property documents. You must ensure that you receive all your original property papers back and get the acknowledgment that you have received them, from the bank. You will require these title deeds in future for resale or mortgage legal purposes. Banks and financial institutions are expected to give back these documents to you in good shape. Sign the receipt of original documents ONLY when you are sure that you have received all the property papers.
- Update your credit report
It is your duty to confirm the update of your credit report. This update on the credit rating agency’s website takes 40 to 60 days. The onus is on you to stay in touch with your lender in order to ensure that they update your credit report (i.e. all the home loan instalments have been paid by you and that the loan stands closed on this date). You must check your credit report after 3 months of closure of the home loan to confirm that this has been done.
- Encumbrance Certificate (EC) - Yes, it is important!
The Encumbrance Certificate (EC) proves that the property is free from monetary or legal liabilities. The document is proof that the property can be sold as free title, and that ownership will come to you without any associated baggage. This document can be procured from the Sub-Registrar’s office. The home loan closure must reflect in your EC.
- Do not forget the security cheques
Every lender asks for 3-5 security cheques when you apply for a home loan. Make sure you collect all these cheques back while closing your home loan.
- No Objection Certificate (NOC) from the lender
No Objection Certificate (NOC) is a legal document provided by the lender which states that the loan has been complete and that there is no outstanding amount to be paid by the home loan applicant as on a specific date. So, whenever you pay off the home loan, it is important that you get the NOC document from your lender. Many lenders will ask for this NOC if you apply for the home loan or mortgage in the future.
- Got ‘Lien’ on the property- get it terminated
‘Lien’ is a legal right granted by the owner of the property, by law or otherwise acquired by a creditor. It serves as a guarantee for an underlying obligation, such as the repayment of the home loan. If the underlying obligation is not satisfied, the creditor has the right to seize the asset that is the subject of the lien.
While closing your home loan, you must ensure that the lender terminates the lien created on the property. This process takes good 10 days. This may also require the bank official to accompany you to the Registrar’s office. The home loan closing process never is completed without the termination of lien created on the property.