Home Loan Closure Checklist

A home loan is among the primary financial burden for anyone, owing to the hefty Equated Monthly Instalments (EMIs). Thus, the idea of closing the loan is quite alluring. In addition to this, the Reserve Bank of India has now mandated that no foreclosure charges will have to be paid by the borrowers on the term loans with floating rates. This mandate has increased the number of people who are seeking pre-closure of their home loans. However, the borrowers must ensure that the following factors are taken care of before the finalization of home loan closure formalities:

1. Once the borrower has cleared the entire amount due to the lender, he/she must collect all the original documents and post-dated cheques given at the time of procuring the loan. These documents include sale deed, mother deed, power of attorney, loan agreement, etc. The documents must be complete, and all the pages must be in appropriate condition. The lender will not assume any responsibility for the documents after the acknowledgement receipt is signed by the borrower.The borrower must procure the NOC from the lender, specifying that all the debt has been settled and the lender does not have any interest or right on the property. The NOC must entail significant details like the borrower’s name, address, home loan account number, loan closure date, etc.The lender must be asked to update foreclosure details with CIBIL to ensure good credit history.The lender might place a lien on the property due to which it cannot be sold. The borrower must ensure that this lien is removed by visiting the Registrar Office along with a representative of the lender.A legal clearance certificate might be obtained from a lawyer in case the borrower wants to sell the property.After the dues associated with home loan closure are completely settled, an updated non-encumbrance certificate must be procured. This legal document must contain complete repayment details.The borrower must track the statement of the account associated with the EMIs of the home loan . Foreclosure documents must be kept handy, in case of any problems with the lender or a government department.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.