If you are nearing the end of your home loan tenure, it is easy to let the excitement and relief blind you to the list of formalities you need to go through to ensure there are no residuals. People often forget that the ending of a home loan can be as tedious as starting one, but worry not, here’s an exhaustive list of things you need to do if you plan on closing your home loan soon.
- Retrieve Original Documents
The documents that you would have submitted while checking for home loan eligibility and loan disbursal are crucial. Make sure you retrieve the original versions of these documents and ensure that they are in good condition. These documents generally include:
- Sale Deed
- Conveyance Deed
- Builder Buyer Agreement
- Power of Attorney
- Payment Receipts
- Possession Letter
- Transfer Permission
- Tripartite agreement
- No-Dues certificate
A no-dues certificate (NDC) is the home-loan equivalent of the widely used no-objection certificate (NOC). Think of it as a document that effectively declares that all your dues have been paid and there are no outstanding dues to be paid to the lender. An NDC ensures that the lender has no rights over your property. Such a document has to contain critical details such as property address, loan account number, loan amount, loan timeline (disbursal and closing dates), etc. Property holders are advised to make multiple copies of this document for hassle-free interactions with prospective lenders/dealers in the future.
- Lien termination
Lenders are likely to have placed a lien on your property as a safeguard against potential default. A lien is a claim over an asset that is used as collateral to fulfill debt obligations. To ensure that the lien holder (i.e. the lender) has absolutely no claim/ownership against your property, you must get this removed from your city’s local registrar’s office. This ensures that there are legal hassles or complications in property ownership. The registrar is likely to request you for an NDC certificate, so make sure you have that before applying for a lien termination request.
- No-Encumbrance certificate (NEC)
An encumbrance certificate serves as a record of all the financial transactions that were undertaken concerning the property that served as the subject of the home loan. Naturally, upon having closed your home loan, this certificate must be updated to reflect the fact that your home loan has been paid in full. This document certifies that your property is free from any legal or monetary liabilities, and must be procured from the sub-registrar’s office. An NEC is particularly handy if you plan on selling your property.
- Update CIBIL (Credit Information Bureau of India Ltd.)
A home loan closure is a significant financial milestone and must be included in your credit record. Doing so also bumps up your credit score! While lenders are quick to inform CIBIL upon you taking out a loan, they might act with the same alacrity when it comes to informing them that you have paid in full. Keep following up with your lender and remind them till the closure reflects on your credit report.
Availing a home loan often entails you performing various like scouting for home loan interest rates, using a home loan EMI calculator, etc. But the closure procedure can be just as tedious, if not more. Make sure you exercise due caution and follow the aforementioned steps to have a smooth and hassle-free closure procedure.