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5 Important Points to Remember Before Closing your Home Loan
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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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Paying off your Home Loan brings you relief and happiness. You feel relieved as you don't have to pay the home loan EMIs anymore and happy because now your home belongs entirely to you. You truly deserve this moment of joy. However, you also need to take care of a couple of things to close your Home Loan properly.
There are certain formalities you need to complete. If you fail to do so, it may lead to certain problems in the future. Here are the important points to remember before closing your home loan:
Recovering Original Documents
This is one of the most important things to do while closing a Home Loan. All original documents handed over at the time of opting for home loan should be collected from the lending institution without any fail.Make sure that every document is in good condition and not damaged or lost. Not recovering these documents may cause problems in the future when you go to sell your property or want to take a loan against it.
You also need to get a new Encumbrance Certificate (EC) stating all financial transactions done on your home are settled. This certificate is proof that your house is not bound to any legal or monetary liability. The EC will enable you to sell your property in the future.
Getting a No Objection Certificate (NOC)
Also known as a certificate of home loan closure, every lending organisation issues NOC when you close your home loan . NOC confirms that your home loan is entirely repaid with no outstanding balance in your name. While getting NOC from the lender, you need to ensure that all details like your name, account number, details of the property, etc. are correct. NOC must state that the lending institution does not have any rights over your property and solely belongs to you now.
Ensuring that the Lender has Updated Credit Bureau's Database
Generally, lending organisations are active about notifying the credit bureaus when you avail of a home loan. However, there could be instances where the information of you closing the loan does not reach the credit bureau promptly. This information is crucial for your credit report and credit score.
Removing Lien on the Property
When your lender grants you a loan, they put a lien against your home. A lien is a legal claim that gives all the property rights to the lender. The lien on your property prevents you from selling it in the future. Hence, when you close your home loan, request the lender to remove the lien on your property, which is generally done by the lender automatically.
Paying attention to the above points while closing your home loan not only smoothens the process but helps you to avoid problems in the future.
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