It's a matter of relief and enjoyment once you have paid the last instalment of your home loan and heading towards the home loan closure. It's an overwhelming experience when you have paid all the EMIs of your home loan and become the legal owners of your home; you would surely like to enjoy it with friends and family members.
While the celebrations are important, it's equally important that you are aware of the home loan closure process and the documents to collect after home loan closure. After you start living in a debt-free house, it is essential as it directly impacts your credit score. The loan is legally not closed unless the lender declares it officially. This article contains a detailed checklist of the documents to collect after home loan closure and the process to be followed. The different sections will describe the home loan closure documents with all the required details:
1. Collection of all original documents
Whenever your lender approves your home loan, you need to submit your original documents as collateral, and you just have the photocopy of these documents. The first and the most important step in the home loan closure process is to collect all your original documents. Also, you need to ensure that these documents are in good condition and there are no missing or damaged pages. The list of the original documents to collect after home loan closure include
Power of Attorney
Loan Agreement papers
Payment receipts (if any)
2. Obtaining The "No Dues" Certificate
The second most important document to collect after home loan closure is the 'No Objection' Certificate' commonly known as NOC. A NOC is the document that you should collect from your bank or the lender immediately after the final payment of your home loan has been completed. A NOC is a proof that you have paid all the required EMIs against your home loan and there are no dues from your side; it also declares that the lender now has no legal authority on your pledged property.
The details present in the NOC include the lender's name, address of the property, settled home loan amount, and start and home loan closure dates. Since NOC is a very important document, it's advisable to make multiple copies (hard and soft copies) of the NOC so that you can use it whenever required.
3. Removal of Lien on the Property
The lien refers to the rights of the bank on your property till your home loan dues are cleared. Having a lien also acts as a barrier to the sale of your property. The banks generally put a lien against your property since, in case of any defaulter in the home loan EMI payments, the bank can recover the loan amount by selling your property.
Therefore, once all your dues are cleared, the next step in the housing loan closure procedure is to get the lien revoked against your property. This helps you regain complete ownership of your property, and you can easily sell it according to your wish. Since it's an official process, you need to visit the Registrar's office along with the required documents and the representative from the lender's side.
4. Obtaining the Updated Non-Encumbrance Certificate
A Non-Encumbrance Certificate is basically a legal document that contains the details of all the financial transactions linked to your property. Once your home loan has been cleared, the next step in the home loan closure process is the updation of the Non-Encumbrance Certificate. You have to pay a visit to the Registrar's office and submit an application for the issue of an updated Non-Encumbrance Certificate.
5. Credit Score Updation
The credit score tells about your creditworthiness, and it is one of the important factors which decides the approval of different kinds of loans. Once your home loan dues are cleared, you should request your bank to update your credit score. The updation process of the credit score generally takes about 20 to 30 days. Therefore, you need to ensure that your lender updates your credit score as soon as possible, and you can also check it through your updated credit report.
Furthermore, if your bank has updated any wrong information by mistake, it is your prime duty to get the issue rectified at the earliest. If the credit score is not updated even after all your loan dues are cleared, you may face difficulty getting loans in the future.
6. Get Updated Bank Statements Regarding Your Loan Repayment
The home loan closure process is not completed unless you receive the loan repayment statements from your lender/bank. The bank statement related to home loan closure is proof that all your dues are cleared, and it helps you in the future if any issue arises. It's a general perception that if all the bank statements related to your home loan are not available along with you, then the loan repayment process is not yet complete.
7. Collecting all the Post-dated Cheques
Most banks make it mandatory for loan applicants to submit post-dated cheques when they apply for a housing loan. This is done for security if any monthly EMI of the loan is missed. If you have cleared all your loan dues and did not miss any EMIs, you should ask your bank to return all your post-dated cheques.
Home loan closure is a critical step that must be completed once your home loan is cleared. Therefore, it is crucial to collect all the home loan closure documents well before time. If you are looking to apply for home loans, you can check the home loan offers at Bajaj MARKETS. You can benefit from the hassle-free application process and extended repayment tenures, that too at attractive interest rates. Don't miss the chance, do check out the amazing home loan offers today itself.