Home Loan: Getting rid of home loan is a big relief for any person. Because only after this he becomes the complete owner of the house and at the same time the burden of EMI also ends, however, it is important to take care of many things while closing the loan so that no problem arises in future.
The experience of owning your own home gives a different kind of happiness. Becoming a home owner is an achievement that makes you feel secure. The 2023 edition of the annual survey ‘Aspiration Index’ also reflects this. In this survey, responses were sought from more than 1700 people aged 22 to 45 across India. After mental health and children’s education, owning a home is of most importance to people. Often people take a loan and build a house. In such a situation, the relief that they get after completing the loan or paying the outstanding amount and closing the loan cannot be expressed in words. However, even before this relief, some important tasks have to be completed so that you do not have to face any further setbacks. BankBazaar.com CEO Adil Shetty has shared some important things that you need to keep in mind while closing the loan.
Important
Checklist
One important task that needs attention after becoming debt free is to retrieve some important documents and get the records correct. Such important actions can have a direct impact on your credit score and property record. A little caution at this stage can save you from problems during any property transfer or sale in future. Here is an important list/checklist of things that you should do after paying off your loan.
Get all original property documents
Upon completing your loan, make sure to collect the important documents submitted during your loan application and registration. These may include sale deed, title deed, possession letter, conveyance deed, transfer permission, power of attorney, builder-buyer agreement and payment receipts. These documents should be returned to you upon closing of the loan.
If you have made a list of documents submitted during the loan application process, ensure that they match with the documents returned to you so that nothing is left out. Typically, banks provide a List of Documents (LOD) during loan application; Use this list to check returned documents.
Make sure all documents returned are complete and in good condition, with no pages missing or torn.
Obtain No Objection Certificate (NOC):
It is paramount to obtain NOC from your lender. It formally announces the completion of your financial commitment, giving you complete ownership. The NOC acts as a confirmation that there is no outstanding on your loan. After receiving the NOC, check that the essential details like your name, loan closing date, property details, loan account number etc. are correct in the document. This document is valuable, especially if you are planning to sell your property or are facing any issues related to reporting the debt to the credit bureaus.
Start the process of deleting Lynn:
Start the process of removing Lin from your property to strengthen your claim and avoid any difficulties in future transactions. When a home loan is in process, a legal claim called a lien is placed on the property. This lien gives rights to the lender in the event of default of the borrower. After settling the entire loan amount, it is important that you initiate the process of removal of LIN at the registration office. To complete this process, it may be necessary to submit a NOC.
Ensuring Encumbrance Certificate
Securing this certificate ensures that your property is free from legal dues and encumbrances, giving you peace of mind. Obtain a renewed Encumbrance Certificate (EC/Encumbrance Certificate) from the Registrar’s Office as proof of complete settlement of all dues related to the property. This step is important if you are planning to sell your property in the future, as the EC confirms that there are no outstanding financial claims against the property.
Withdraw security check
Withdraw post-dated security checks deposited during the loan tenure and avoid any unexpected complications.
Check whether the loan status is updated
After repayment of your loan, your lender is responsible for updating the credit bureaus about the latest status of your loan. Therefore, when you check your credit report about a month after the loan is closed, the loan status should show as “Closed”, indicating full payment of all your dues. It is important to have an accurate picture of your loan status. If any information appears incorrect on the credit bureau report, you may need to contact the lender to investigate.
When checking your credit score, assess the impact of loan closure on your score. Although the long-term impact should generally be positive, it is not uncommon for the closure of a secured credit line to have a temporary negative impact.
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