Must do things on Home Loan Prepayment and Closure procedure
Posted by shreekantrao89 on January 20th, 2017
1) Get back all the original documents
Once you have made all your payments, the Bank or Housing Finance Company will likely give you the original documents. You should make sure that all the documents you submitted with the bank when taking the loan are returned. Usually it will be the Title Deeds and Mother Deed (if applicable).
Don’t just check for document alone. Make sure that all the pages are present in good condition as well. I have seen instances where last page of sale deed went missing. In that case you need to arrange for the missing page which is a tedious process.
Make sure all the pages are intact in front of the bank official before signing on the acknowledgement of the bank.
Once you sign, you can’t undo it and banks usually won’t be responsive in this regard. It is usually a good procedure to obtain the documents from bank by visiting them than request documents by courier.
Tip: Once you get the originals scan them and keep a soft copy in a safe place.
Also read: Documents to check to avoid fraud when buying house
2) Obtain No Object Certificate
NOC or NC is a No Object certificate which is a clearance certificate from the bank or housing finance company. This states that the Bank does not have any more interest in the property and its cleared by the bank after removing all hypothecation.
When you get this make sure the NOC clearly mentions the Property details (like address etc.,) , name of the borrower, home loan account number, date of loan starting and closure, amount borrowed and repaid(some banks don’t mention) .
Also a clause should be clearly mentioned that the borrower has paid all the dues and the property is now debt-free calculated through Online Emi Calculator. This will make sure that the property is entirely yours now.
3) Remove lien on property from Registrar Office
In some cases where the credibility of the borrower is questionable, some banks might have created a lien. A lien is nothing but a transaction registered in the Registrar office which prevents you from selling the property.
If no lien was created, then there is no issue. However, if a lien was created then it is important to have this lien removed.
A bank official will accompany you to the Registrar office to terminate this lien. Remember that you will not be able to sell the property unless this is removed.
4) CIBIL Credit Update
Lenders do not show the same interest in updating CIBIL when loan is repaid as when loan is taken. Banks/finance institutions often delay or forget to inform CIBIL when a home loan is pre-closed.
A CIBIL score is nothing but proof of your credit worthiness. It takes 20-30 days to complete the process. Be in touch with your bank to make sure this is done (It’s likely you won’t get proper response. A good relation with banker comes in handy). Once the bank informs it’s done, get an updated CIBIL report to make sure it is reflected in score.
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