Owning a home is easily among the biggest dreams for most of us. The easiest way of doing it is by taking a home loan. However, the payment of the EMIs on time remains to be a big worry and it can indeed be a relief to be in a position where we have enough money to be able to pre-pay the loan and save on the interest. However, it is necessary for the home loan to be closed properly to ensure that no problems are faced in the future. Some useful tips:
What Exactly is Home Loan Pre-Payment?
Home loans are taken for certain specific tenures that may extend up to 30 years and is primarily dependent on the age of the applicant at the time of making the application. While for sure the interest paid increases with the tenure, most applicants try and opt for the maximum period possible to keep the monthly payments to the most affordable level. If you plan to foreclose the home loan you will need to communicate your intention to the lender in writing. Most lenders will charge a penalty for loan pre-payments if you switch the loan to another lender but waive this if the foreclosure is met from your own funds. However, to claim this benefit, you will need to prove it that the loan is being pre-paid from your own resources. The Reserve Bank of India has now instructed banks that no such penalties can be collected if the loan was on a floating rate.
Home loans are taken for certain specific tenures that may extend up to 30 years and is primarily dependent on the age of the applicant at the time of making the application. While for sure the interest paid increases with the tenure, most applicants try and opt for the maximum period possible to keep the monthly payments to the most affordable level. If you plan to foreclose the home loan you will need to communicate your intention to the lender in writing. Most lenders will charge a penalty for loan pre-payments if you switch the loan to another lender but waive this if the foreclosure is met from your own funds. However, to claim this benefit, you will need to prove it that the loan is being pre-paid from your own resources. The Reserve Bank of India has now instructed banks that no such penalties can be collected if the loan was on a floating rate.
Get the Original Documents Back
Once all the formalities of the loan pre-payment have been completed, the lender is supposed to give you back all the original documents you had submitted at the time of getting the loan as per the housing loan requirements.The most important document is the title deed of the property. When the deed is returned, you should check it thoroughly to ensure that all the pages are present and that the document is in a good condition before issuing your formal acknowledgment. Ideally, you should instruct your lender to return the document to the table to you rather than by courier so that you can check the condition of the document before accepting it. Since the title deed is extremely valuable and establishes your ownership over the property, you should arrange to store it is a safe place after scanning it so that you can refer to it or take a print out any time you require without needing to access the original.
Get the No Objection Certificate
The No Objection Certificate or NOC is a clearance certificate issued by the lender that certifies that there are no more dues outstanding of the loan that had been extended, and that it does not have any more interest in the property and that the hypothecation has been deleted. You should ensure that the NOC mentions clearly all the relevant details like the name of the borrower and the address of the property, the home loan account number, dates of the loan start and closure as well as the amount of the loan. The certificate should also explicitly mention that all dues have been paid.
Remove Any Lien on the Property
Sometimes lenders create a lien on the property that makes it impossible for the owner to sell the property. The lien is created with a simple transaction in the office of the Registrar but forgetting to have it removed can create problems in the future when you are selling the property off. To get the lien removed you need to visit the Registrar’s office accompanied by a bank official. Keep in mind that it can take 7-10 days for the Registrar’s records to reflect the change so any process for selling off the property should be initiated only after that.
Update of CIBIL Records
Though lenders place great credence on the CIBIL credit report at the time of extending the loan, they prove to be often quite lazy about informing CIBIL about the foreclosure of the loan. You need to keep following up with your lender to receive a confirmation of their communication to the rating agency. Wait for about a month and then get a copy of the report from CIBIL to make sure that it has been updated.
Conclusion
It is for sure not good enough for you to just pay the lender back and sit back to enjoy your home free from all encumbrances. You need to make a checklist of all the things listed above and ensure that you get the original title deed back and that all the necessary updates in the records with the various authorities have been made.
Isabella Rossellini is a writer and writes her own blogs. She wrote many articles on fashion, beauty, food, technology, education etc.
