Taking out a home loan and repaying it are both time-consuming and exhausting tasks. However, both provide you with the endless joy and pleasure of purchasing and eventually owning a property on your own. If you have sufficient finances, foreclosure of your house loan is always a welcome and prudent move. If you have some extra cash, it is always a good idea to foreclose a loan or make partial payments. It allows you to be free of monthly EMIs while also providing you with the mental satisfaction of having completed your debt. While the financial commitment is fulfilled, additional procedures must be undertaken to ensure that you and your beneficiaries enjoy trouble-free homeownership in the future.
To protect your property and financial interests, do the following basic checks.
Request for your original documents
When you apply for a home loan in India, the lending bank holds all of the original documents, while you may have taken photocopies for your records. Your papers should be returned to you once your loan is closed. It’s critical to double-check that you’ve gotten all of the required documents and that they’re in acceptable condition. Your selling deed, conveyance deed, builder-buyer agreement, power of attorney, payment receipts, possession letter, transfer permission, tripartite agreement, and other papers may be included in this category.
Obtain no-dues certificate
A bank’s No Objection Certificate (NOC) confirms that you have paid all mandatory fees. This is an important document that can be produced in the event of a subsequent disagreement. A nil-Encumbrance Certificate (EC) documents all financial transactions involving the property, which is useful for tax planning. These documents demonstrate that the property is free of defects and provide you with clear title ownership if you ever decide to sell it. Obtain both of these certifications from the financial institution from which you obtained your home loan.
Confirm termination of lien
In the event that a borrower defaults, banks always want to protect their position. As a result, a borrower with a poor credit score may have a lien placed against his or her home. If necessary, the lender will be able to sell the property in order to recoup the debt. The borrower will be unable to sell their property due to the lien. As a result, it’s critical to get the lien lifted so that you don’t have to deal with it again. The local registrar will take care of it, however their office may require a NOC from the bank, so get one beforehand.
Ensure that your credit score is updated
You should check your credit score after your home loan is closed. You risk not being accepted for another loan or a reduced interest rate if it has not been updated. Do not forget to remind your bank if they have not been prompt. Your credit score is a critical measure of your borrowing ability and repaying capacity.
Encumbrance certificate
An encumbrance certificate verifies that the property in question is free of all financial and legal obligations. It demonstrates that the property can be sold as a free title and that you will receive possession without any conditions.
