A home loan is a big enabler that helps mainly first-time home buyers to purchase their dream abode. Buying a house through a home loan requires a long-term commitment and oodles of financial discipline to repay it in full on time. However, a borrower needs to keep in mind a number of important things even after paying the final home loan instalment for complete peace of mind.
Here are 5 such crucial things that must be factored-in while closing a home loan.
1. Get the original documents back
Remember when you had taken the loan, you were asked by the bank to fulfil countless formalities? You also provided a large number of original documents and had to sign on so many papers. However, you must make it a point to get all the documents back from the bank once you’ve closed the loan. Ask the bank to return the original documents such as property deed, contract, indemnity paper, etc.
There have been incidents in the recent past where banks have lost the original property papers. You can take legal action against the bank to get compensation if the bank is not able to return your property papers which were pledged during the loan approval process.
2. Ensure your bank updates the credit bureaus regarding your loan closure status
You may have cleared your outstanding home loan, but you may need to apply for some other loan in the future – something that will require a healthy credit score. Therefore, after paying the last home loan EMI, request the bank to close the loan and inform the credit bureaus about the closure status. Usually, it takes around 30 days for the credit bureaus to reflect the updated status. So, check your credit report after 30 days of closing the loan and if you spot any discrepancy, immediately reach out to your bank and ask them to take corrective measures.
3. Get the lien removed from your property
In order to minimise the risk, banks at times put the property on lien until the borrower repays the home loan in full. But once the loan is cleared, get complete clarity whether the property has a lien on it or not, and if so, ensure that you get it removed at your local registrar’s office with the help of bank officials.
4. Get the encumbrance certificate
Though you have got the lien removed from your property, it’s also important that you get a fresh encumbrance certificate issued from the registrar office. An encumbrance certificate shows all the financial transactions that were done against your property and if there is any amount that needs to be paid.
5. Get NOC and legal clearance certificate
You should also request your bank to issue a No Objection Certificate that should state that it no longer has any claim/interest on your property. The NOC should contain correct details pertaining to your name, property, address, loan account, loan date, closure date, etc. It should mention in the certificate that the property is debt free as the loan has been closed on the specified date.
Also, don’t forget to take the detailed statement from the bank which should clearly show the loan amount, interest, and EMI payment till the last payment and the final outstanding amount being ‘zero’. It’s even better if you could get the repayment track record for the entire loan tenure. If you had given a cheque to the bank as security while taking the loan, you should also get it back at the time of closure.
The writer is CEO, Bankbazaar.com