Here are a five things you should do immediately once you pay your last home loan EMI
The joy of owning a home doubles once you repay your home loan and have no more big EMIs to pay anymore. However, once your home loan is repaid, there are a few essential steps you need to take to ensure there are no complications in the future.Obtain the NOC / NDC from your lender
Once you have completely paid all the repayments associated with your current home loan, it’s important to obtain the no objection certificate (NOC) or No Dues Certificate (NDC) from your home loan lender. This certificate is issued by the lender, certifying that you have repaid the loan fully and no dues are outstanding against your name. While obtaining this certificate, make sure all relevant details are mentioned and spelled correctly. It usually includes name of borrower, loan account number, details of property against which the loan was taken, date of loan closure etc. This certificate must also state the fact that the lender doesn’t have any authority over the property and it solely belongs to the borrower now.
At the time of closure of your home loan, the lender has to release all documents taken from the borrower when the loan was applied. Usually, the lender provides you a list of documents (LOD) submitted while applying for a loan. Borrower must cross check all the original documents with this LOD and make sure to retrieve them after closing the loan. These include: bank account statements, income proof, property papers, deed of sale, possession letter etc. Ensure that no document is misplaced or any page is torn. They should be in good condition with all the original pages intact.
Moreover, some lenders may take security cheques from borrowers while disbursing a home loan to recover some amount in case you default on any future EMI. Therefore, while taking your original documents, make sure you retrieve those cheques as well when the loan is closed.Make sure the closure is updated in the credit bureau’s database
Mostly, lenders are quite pro-active in informing credit bureaus whenever you avail any form of credit, whether it’s a credit card or loan. When you prepay or close the loan you need to ensure lenders act promptly in updating this with credit bureaus. At times, they may forget to inform the bureau concerned. Once you close your loan account with the lender, make sure to request them to inform the credit bureaus as well, so that the same can be updated by the bureaus and reflect in your credit report. Continue following up with your lender until the information is updated in your credit report. Alternatively, when the set time frame given by lender has passed, you can consider placing an online request to the credit bureau concerned to update your records.Get the lien terminated from the Registrar
Sometimes, when your lender is unsure about your repayment capability, they often put a lien against your property (register the mortgage), which is a legal claim against the asset mortgaged to secure the home loan. In case you default on your loan, the lien would empower the lender to sell the property to recover outstanding dues. The lien also restrains the home loan borrower from selling the property until the loan is closed. While closing your loan, make sure you get this lien removed from your city’s local registrar’s office to avoid any legal issues or hassles in ownership of your property after the loan is closed. The registrar may require your NOC certificate while approving your request to terminate the lien and discharge the release deed.Obtain the updated no encumbrance certificateThe encumbrance certificate is a legal document containing detailed records of all your financial transactions related to the property mortgaged for home loan. Once you have closed the loan, the certificate must also reflect all repayments done. This document certifies that your property is free from any legal or monetary liabilities, therefore removing scope of any hindrance from the home loan lender in case the borrower wants to sell the property any time after closure of the home loan.The writer is CEO& Co-founder of Paisabazaar.com