We Indians are as much eager to pay off our Home Loans as we are to take it when buying their home. The countdown to finish the Home Loan starts as soon as the lock-in period is over. Be it arranging money from one’s own savings, provident fund, getting something from inheritance, the first thought for any such amount is to put it in pre-payments so that the home-loan can be pre-closed as soon as possible.
However, when Pre-Closing your Home Loan it is better to keep these below mentioned 7 Points to keep hassles at bay and gain complete peace of mind:
1. Original Documents and Post-Dated Checks
At the time of obtaining a home loan, you must have submitted some property papers in the bank like the sale deed, mother deed, etc. in Original, so once you have paid off the debt, you need to take back all those Original documents from the bank. The Bank personnel don’t entertain customers later, therefore it’s important to check all the documents on the spot, check they’re in proper shape and no important doc is missing. Same goes for your post-dated checks, if you are pre-closing your home loan in all probability your bank will have extra post-dated checks. Therefore, do not forget to collect them at the time of pre-closure.
2. CIBIL (Credit Information Bureau India Ltd.) score
A High CIBIL Score shows your credit worthiness and that you’re a good borrower, thus helping you obtain subsequent loans. The bank or the lender has a casual approach towards updating your CIBIL score however, take it as your responsibility and make sure that while pre-closing your home loan, the bank or lender informs the CIBIL authorities and updates your CIBIL score.
3. No Objection Certificate (NOC)
NOC is an important certificate that states that is a clearance note from your bank that your property is debt-free and the bank or the lender has no interest in your property. Before you obtain the certificate you can instruct the bank to include a debt-free property clause in the NOC. Additionally, when you obtain the certificate check that it specifically mentions your name, address, home loan account number, date of loan closure, etc.
4. Get a Home Loan Statement
Once you’ve paid the pre-closure amount and made your property debt-free, it is crucial for you to get a home loan statement which is a proof of all the payments made by you with details of dates and amounts.
Many banks register a lien on the property of the borrower in the Registrar’s office and thus it is legally binding and deters the borrower from selling that property. Once you have paid off the loan, ask the bank to get the lien removed from your property. The removal of lien from the records takes up to 10 days.
6. Encumbrance Certificate
Encumbrance certificate is a legal document that reflects all the monetary transactions pertaining to the property and once the loan has been paid off, the same must reflect on the encumbrance certificate. Once the prepayment of the loan is done and the removal of lien (if any), then you need to get yourself a new encumbrance certificate issued from the Registrar’s office.
7. Legal Clearance Certificate
In case you intend to sell the house, getting a Legal Clearance certificate from a lawyer will only increase your credibility along with accelerating the procedure.
Once you have all the above documents in your possession, it is all the more important to get a separate folder and keep these documents safely in it.