Repaying a home loan is a huge financial responsibility and even as you make every effort to pay your EMIs on time, you should create a checklist to ensure proper closure of the loan. Among the essential elements is to collect your No Dues or No Objection Certificate (NOC) and your property papers. You should generally receive this certificate via post once you repay the loan in its entirety. However, if for reasons such as a change in address, you do not receive this certificate, make it a point to obtain it from your lender.
To know more about a NOC and the importance of collecting it post repayment, read on.
What is NOC?
A NOC is a legal document issued by your lender stating that you have paid all your outstanding dues and have settled the home loan in full. The NOC letter should bear your name, details about the property, the loan account number, and the beginning and close date of the loan. Obtaining your NOC letter ensures that you can gain rights over your property.
Here are some of the benefits of possessing a NOC letter.
Revokes the lender’s right over your property
Obtaining a NOC is key to removing the lien held over your property. To prove that you have paid all outstanding debt and conveyance of the property’s title has become void, you should submit the NOC to the registrar of properties. Upon doing so, the lien pertaining to the hypothecation is struck off and you become the owner. If you fail to get the NOC and submit it to the registrar of properties, you could land up in a legal tussle in the future.
Helps you rectify and improve your credit score
When you clear the home loan, your lender reports the same to credit bureaus like CIBIL. If your lender fails to update credit bureaus with this information, your credit score can suffer a setback. In such a situation, having a NOC works in your favour as you can produce the document to indicate you have no outstanding dues pending. By rectifying the error, you improve your credit score.
Allows you to access high-value loans in the future
Since the NOC mentions that you have successfully repaid the loan, you can furnish the document along with the other required documents when applying for a new loan. This is particularly important for large loans as the failure to produce an NOC may cause potential lenders to think that you are currently servicing a big loan.
Paves the way for you to sell the property
A NOC serves as an important document for property purchases. Unless the lien over your property is struck down, you cannot sell the property. Possessing the NOC letter helps the buyer establish that you are in charge of the property and that s/he can go ahead with the purchase.
Makes you the recipient of insurance claims
Since the NOC allows you to take ownership of the property, it enables you to become the recipient of insurance claims. If your lender still has charge over the property, insurance payments will not be made to you, for instance, in case of unforeseen circumstances such as losses due to fire or natural calamities.
Failing to get this important legal document can lead to many legal complications and hence it is vital to know everything about a NOC and ask your lender for the NOC letter when closing your home loan. You can begin by writing an application letter requesting for a NOC along with the other original documents. Most lenders send the NOC letter through a registered post to your residential address. So, in case of any address change, do not forget to inform your lender.
Now that you know what a NOC is and the importance of possessing one, closing a home loan will be much simpler. Today, obtaining a NOC is easy as lenders give you the option of downloading it online via the customer portal. With loan closure taken care of, you can focus on application and repayment.