There is perhaps no greater joy on this planet than being able to clear off your home loan and having a roof over your head that you can finally call your own. But if you do not follow the proper norms during the closure of your loan, you could be asking for trouble at a later date.
Here are five pointers for you to keep in mind if you have a home loan that is coming up for closure:
- Obtain a No Objection Certificate or NOC from your bank: Once you have completed all the repayments on your loan, you must take an NOC from your lender. This NOC should list out all the relevant details about your identity and your loan account. It should also state clearly that you have repaid all your dues and that the lender no longer has any claim on your property.
- Collect all original documents: At the time of making your loan application you would have submitted a whole lot of paperwork that included several original documents. Keep a list of these documents and collect each one of them after your loan account is closed.
- Ensure that your loan documents are in order: From the time you make an application for a home loan, till such time your loan is fully repaid, the bank or housing finance company (HFC) is in charge of all your loan documents including your original deed of sale. Between the time of the loan application and the final approval of the loan, these documents pass through several departments of the bank such as the originating branch, the legal department and the regional head office. After the loan has been disbursed these documents are kept safely in a locker at a central location.
During the closure of the loan, the reverse process is followed and the loan documents move through the several departments again. Since they change so many hands, sometimes it is possible that some loan documents may go missing (happens rarely). However to ensure everything is in order make sure you collect all the documents from your bank personally and check to see that everything is in order.
- Update information in CIBIL: Lenders are usually very prompt in reporting the opening of a loan account with CIBIL, but there is usually a lag noticed when the loan account is closed. Once you close your loan account with your bank or HFC make sure you request them to update this information with CIBIL. Ask for a timeframe for the same and follow up with the lender to see whether it has been done. Alternatively, you can make an online request to CIBIL to update your records. CIBIL will normally resolves the issue and reverts back within 30 days.
- Remove the lien from the registrar’s office: Sometime if lenders are not sure about your repayment capabilities they are likely to put a lien on the mortgage documents when they submit them in the registrar’s office. A lien is a legal claim against your asset in case there is a default. While closing your loan account, check with your bank whether a lien had been put on your property. If the answer is yes, you must get it removed during the closure itself to avoid legal hassles if and when you are trying to sell your property.