January 2022
Here is everything you wanted to know about home loan insurance policies in India.
Borrowers always feel a sense of relief, when they close their home loans, after months and years of paying the EMIs. At this stage, although one may feel carefree, there are several checks that you must perform, before you sit back and relax.
THINGS TO DO AFTER CLOSING HOME LOAN
| obtain a no-dues certificate, stating that there are no further dues against your name. | Take back the original property documents that you had submitted to the bank, while availing of the loan. | Ensure that any lien against the property, created by the bank, is terminated. | Obtain an encumbrance certificate from the sub-registrars office, stating that there is no further liability or debt against the property | Ensure that the credit report has been updated,to reflect the closure of the loan. |
1. Get hold of a no-dues certificate
As soon as you repay your home loan, ensure you get an NOC or an NDC. This is an acknowledgement of the fact that there are no further dues against your name and account. If a glitch comes up, this is the right time to verify it as well. Check the details, such as the name of the borrower, your account number from which the EMIs were being deducted, details of the property, date of closure, etc., and ensure that these are accurately documented. An NOC mentions that the borrower is henceforth the legal owner of the property and there is no role of the lender going forward.
2. Ask for your original documents
When you apply for a home loan for a property, the lending bank keeps all the original documents while you may have taken home photocopies of the same for your reference. Once you close your loan, the bank should return your papers to you. It is important to check whether you have received all the documents that were submitted and whether they are in good shape. These documents may include your sale deed, conveyance deed, builder-buyer agreement, power of attorney, payment receipts, possession letter, transfer permission, tripartite agreement, etc. Bring it to the notice of the lender, it if you feel that some document has been misplaced. In some cases, your lender may also have taken cheques, for security. Ask for these as well, since the bank will not need them anymore.
3. Confirm the termination of the lien
Banks always want to secure their position in case a borrower defaults. Hence, a borrower with a weak credit score may find a lien against his/her property. This empowers the lender to sell the particular property for recovery of dues, if necessary. The lien will also restrict the borrower from selling their property. Hence, it is important to get the lien terminated, so that it does not create any problems for you in the future. The local registrar will do this for you but their office may ask you for an NOC from the bank which is why an NOC should always be your first step.
4. Obtain a nil-encumbrance certificate
Visit the sub-registrar’s office to procure the nil-encumbrance certificate or an EC. This certificate is proof of the fact that there is no further liability of debt and thus, devoid of legal or financial tangles. It is an important document, in case you wish to sell your property. You can show the encumbrance certificate (EC) to a prospective buyer, to avoid any chances of your property being viewed as a problematic one.
5. Ensure that your credit score is updated
Once your home loan is closed, you must check your credit score. If it has not been updated, you run the risk of not being considered for another loan, or for a lower interest rate. In case your bank has not been prompt, do not forget to remind them. Your credit score is an important indicator of your performance as a borrower and your repayment capacity.
Also read: Home Loan Insurance: All You Wanted to Know
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