Just like you have to be informed while availing a Home Loan, you should also be well aware of the process when closing it. A Home Loan Closure checklist is included in this blog post to help you through the process.
1. Request for all the original documents from the lender
As a Home Loan is a secured loan, where the property functions as collateral against the loan amount, the original property documents are with the loan provider throughout the loan tenure. After Home Loan closure, the first thing you should do is ask for all your original documents, like the Title Deed, Sale Deed, Loan Agreement and Power of Attorney, from the lender.
After receiving these documents, ensure that everything is in good condition and none of the documents are missing. As per regulations, the loan provider should return the property documents within 30 days of the closure of the loan.
2. Collect the NDC from the lender
After closing your Home Loan, the lender (loan provider) will give you an NDC (No Dues Certificate). This certificate confirms that you’ve fully repaid the loan and that the lender has no legal claim over the property.
Carefully check all the details, like your name, the property address, loan amount, Loan Account Number, the starting and closing dates of the loan etc. on the No Dues Certificate to avoid any discrepancies.
3. Remove the property lien
The lender has a lien or ‘Right to Possession’ on the property to ensure that you are unable to sell the property while the loan is still being repaid. After Home Loan repayment, the lien can be removed by visiting the local Registrar’s Office. A representative from the lender will accompany you to the Registrar’s office to complete the formalities. Please note that if the lien is not removed, you will not be able to sell the property even after closing the loan.
4. Get an updated Non-Encumbrance Certificate
The Non-Encumbrance Certificate of the property has detailed information of all the transactions related to the property. For example, when a Home Loan is being repaid, the Certificate shows the outstanding loan on the property.
After the closure of the loan, the Non-Encumbrance Certificate should be updated accordingly. This can be done by visiting the Sub-Registrar’s Office along with the NDC.
5. Update your Credit Score
It can take up to a month for your lender to send the Closure of Loan confirmation to the Credit Bureaus, after which your Credit Score will be updated, accordingly.
After about a month, check your Credit Report to verify whether the score has been updated. You can contact your lender if the same does not reflect in your Credit Report after a month.
Closing your Home Loan successfully
It takes a lot of effort and time to reach the moment when you are about to close your Home Loan. Being negligent or ignorant at this stage could result in serious consequences in the future. Keep this Loan Closure checklist handy to ensure that you don't miss any critical steps in closing the loan successfully.
T&Cs apply.
FAQs
1. How long does the Home Loan closure process take?
The Home Loan closure process takes a few working days after the final payment. It includes verification, returning of the documents and issuance of the No Dues Certificate.
2. What is a 'No Dues Certificate' and why is it important?
A No Dues Certificate confirms that the borrower has repaid the loan in full. It’s an important document for clearing liabilities, updating credit records and removing the lender’s lien on the property.