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Closing the home loan chapter properly
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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.
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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One of the biggest investments an Indian makes in his or her life is in a house. This dream is usually funded through a home loan. It is, therefore, a matter of great celebration when you have paid the final EMI of a house, or pre-closed a loan.
In India, a home loan is usually offered for a period of 15–20 years, but it is always prudent to not have a loan running for very long. Here you have the option of pre-closing a home loan.
A home loan pre-closure means, making your home loan debt payments to the bank/financial institution in full before the tenure ends. But make sure that if you’re planning to close your home loan ahead of the scheduled tenure, you must inform the bank or financial institution about this decision, in writing.
However, people often forget to complete certain important actions related to the home loan closure. Let us see what these important points are:
An NOC is a legal document provided by the lender, certifying that you have repaid the complete loan amount in full and there are no outstanding balances. The lending institution will also put its stamp on the document. Normally all lending companies dispatch the NOC once the loan is repaid in full. However, if yours does not, you have the right to ask for this extremely important document.
Ensure that you take back every important document from the lender that you had submitted at the time of availing the home loan. Such documents are extremely critical for the future sale of the house and also in case you wish to take a loan against the property later.
Some of these important documents are:
Always ensure that you collect these documents from the bank branch and not via courier. There are many cases where documents have been misplaced in transit.
Lien, in simple terms, means that your home loan lender will have the right to sell your property if you don't repay the loan amount in full. Nowadays, banks avoid putting a lien on properties as they go out of their way to check their customers’ backgrounds and keep all the original documents in their possession until the final repayment.
Nevertheless, you must check with the lending company if they have put a lien on your property. In case they did, you should seek their assistance in its removal.
Your CIBIL report will have all the entries and payment records related to your loan. Every lender goes through this report before granting a loan to a borrower. Make sure that your CIBIL report gets updated once you have closed your home loan.
Normally, it gets done by adding a ‘DATE CLOSED’ entry, with the exact date of the home loan closure. However, banks may sometimes forget to make such updates. You might run into trouble when seeking credit at a later date if your CIBIL report has not been updated.
While paying back the home loan in full is a huge step and cause for you to breathe a sigh of relief, just take a little more care and invest some time to ensure that you complete all the necessary procedures of home loan closure to avoid future problems.
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