There is no greater joy than the joy of repaying your home loan and getting the complete ownership of the property. It is also a monetary relief knowing a major chunk of your earnings will now stay intact and not go away in clearing EMI debt. But the end of the relief also comes with a checklist which any individual as a house-owner should maintain. After the settlement of the loan, there are a few things that one should ensure have been settled as well to avoid any future complications.
Documents from the Lender
When applying for a loan the lenders keep all the original documents of the property until the loan has been cleared. After the closure, collect all the documents which may include sale and title deed, loan agreement, power of attorney etc. It is imperative to go through each and every document and check if the pages are intact.
No Dues Certificate or NDC
A No Dues Certificate or an NDC is the most important piece of paper that should be collected from the lender. The NDC mentions the home loan repayment and settlement of the and gives complete authority of the property to the borrower. The NDC should also mention all the crucial details like address of the property, name of the borrower, loan amount, start and end date of loan. Always keep several copies of the NDC handy for any kind of property related transactions in the future.
Ownership and Removal of Lien
Lenders may put lien on your property during the loan tenure. Ensure the removal of lien is completed for the reselling of the property in the. The process of getting complete ownership from the lender involves visiting the Registrar’s office along with a representative from the lender’s side. Some people also get a legal clearance involving a law firm just to have a smooth and hassle-free process ownership of the property.
Updated Non- Encumbrance Certificate
Once the debt towards the home loan has been cleared, an official certificate is issued which contains the details of the financial transaction of the lender towards the property. The settlement of the loan should reflect on the Non- Encumbrance Certificate.
Updated Credit Score
Your credit score is the deciding factor for every future loan or even credit card for that matter. Once the home loan has been closed and all dues paid, the credit score should change and it should reflect within 30 days. In a rare scenario, if the score is not updated the borrower can get in touch with the lender.
Collect post-dated cheques (In case of pre-payment)
If the borrower pre-pays the loan, there is a chance that he/she had not anticipated it and gave the lender post-dated cheques. It is prudent that the borrower collects these cheques after the foreclosure of the loan.
Collect your security cheques
When you apply for a home loan the lender asks you for 3-5 security cheques when you apply for a home loan. Make sure you collect all these security cheques back while closing your home loan. It is a standard banking practice in India to ask for post-dated cheques for loan repayments in India. Since your repayment is by way of auto-debit to the account the bank has taken postdated cheques for the full loan amount. The main reason for the practice of seeking postdated cheques by banks is that it is far quicker for the banks to recover money due in a cheque dishonor case than in a regular civil case for retrieval of loan dues. Hence the practice has continued over the years.
A borrower can always keep in mind these simple guidelines to get a sense of direction and a smooth closure of the home loan.
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