25 MAY, 2021

It could be an occasion to celebrate when you have paid all the home loan EMIs and there is no outstanding balance remaining. After all, repaying your loan is both a monetary and psychological relief now that you have complete ownership of the property. However, your work is incomplete unless you ‘close’ the loan.

To close a home loan, you will need to complete the following tasks:

  • Get NOC from the lender
    As soon as you repay your loan amount, collect the No Objection Certificate (NOC) from the lender. The NOC is a proof that you have repaid the loan in full and have no remaining outstanding dues. While you take the NOC from the lender, check the details carefully. It should accurately contain the name of the borrower, date of loan closure, details of the collateral property, loan account number and a declaration that the lender has no right over your property. 
  • Ensure Credit report is updated
    When you take a loan, it is reflected in your credit report. However, once you have repaid the loan in full, lenders might miss out to  update your information with credit bureaus or there could be procedural delays. You must ensure that your credit report is updated with the loan closure. Usually, it takes 30 days for the repayment to be reflected in the credit report. If the report is not updated within a month, you can get in touch with the lender and remind them to update your report.   
  • Request for lien removal
    When you take a home loan, the lender puts a lien against your property. The lien gives them the right to sell off the property if you default on repayment. This lien also prevents you from selling the property until the loan is closed. To remove the lien on the property, you might need to visit the city’s registrar along with the lender’s representative. Removing the lien would save you from any legal complications related to the ownership of the property in future.
  • Obtain original documents
    You might have submitted a list of original documents to the lender while availing  the loan. Make sure to collect them back to close the loan. It would be best to cross-check that you have obtained all the documents like sale deed, possession letter, property papers, security cheques etc. Also, ensure that your documents are not misplaced and are in good condition.
  • Obtain a non-encumbrance certificate
    A Non-Encumbrance Certificate is a legal document that contains all the financial transactions related to the property that you mortgaged for the loan. Make sure that you obtain this No Encumbrance Certificate from the lender while closing your loan. This certificate should reflect that you have repaid the loan and there is no legal or monetary liability on the property. Obtaining this certificate would be helpful if you wish to sell the property.


The home loan closing process is as crucial as repaying the loan. Unless you complete all the processes, your home loan would not be considered closed, reflecting poorly in your credit score. Reach out to your home loan provider in case any of these steps has not been completed.

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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.