When you pay the last instalment of your house loan and shut your home loan account, you’re likely to feel a rush of satisfaction and relief. ‘Patience growing is delicious,’ they say. When you eventually gain sole ownership of your home, all of the trouble of applying for the loan, gathering all of the documentation, making down payments, and finally paying EMIs is well worth it. While you’re busy throwing a large party to celebrate your debt-free home, you should also make sure you understand and execute all components of a home loan account closure.

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When It Comes to Closing Your Home Loan Account, Here’s What You Need to Know

Only when the lender declares that a house loan account is closed is it regarded closed. There are some procedures that must be done, so we’ve compiled a list of items to keep in mind when you terminate your home loan account.

Home Loan Account Gather your original documents first.

Any lender who accepts your application for a house loan keeps all of your original paperwork, leaving you with just photocopies. When it’s time to pay off your loan, make sure you get all of your original documentation back from the bank. You must also ensure that all of the papers you have received are in good condition. The following is a list of documentation you may need to obtain from your lender:

Deed of title

Deed of sale

Attorney-in-Fact

Agreement on a loan

Letter of possession

Receipts for payments, etc.

In addition, you must immediately notify your lender if you do not get any of the requested documentation from the bank.

Home Loan Account-Obtain the “No Dues” Certificate (NDC)

An NDC, also known as a ‘No Objection’ Certificate or NOC, is a document that you must get from your lender as soon as you complete your home loan’s final payment. An NDC implies that you have paid all of your EMIs to the lender and that you have no outstanding debts, thus the lender no longer has control of your property.

The NOC must include information such as the customer’s name, property address, loan amount, loan account number, and the date the loan account was opened and closed. It’s also a good idea to create photocopies of the NOC so that future interactions with other lenders go smoothly.

Home Loan Account-Have your property’s lien removed.

In simple terms, a lien gives the bank ownership of your property unless you pay off your obligation, and it prevents you from selling it. Banks place a lien on your property so that if you don’t pay your EMIs, the bank can sell it to recoup the loan amount.

As a result, when you have paid all of your EMIs and closed your home loan account, it is critical to get the lien remove in order to have entire ownership of the property and to be able to sell it without difficulty in the future. To get the lien remove, you must go to the registrar’s office with a representative from the lender.

Obtain the Non-Encumbrance Certificate that has been updated.

You must visit the Registrar’s Office and apply for a new Non-Encumbrance Certificate once you have paid the total loan amount and the lien has been remove from your property. It’s a legal document that contains meticulous details of all financial transactions involving the property.

Return Security Cheques

If you’ve given the lender post-dated security checks Make sure you get them back when your home loan account is close.

Check to see whether your credit score has been updated.

A strong credit score (750 or higher) is essential for obtaining a loan (both secured and unsecured) with minimal hassle. As a result, make sure that your lender updates this information to the credit bureau after you pay the last EMI on your house loan. The new credit score takes about a month to appear in your credit history. And you must follow up with the bank on a frequent basis until you see it. Also, if your lender has submitted any incorrect information by accident. It is your responsibility to correct it as soon as possible.

Now that you know what to keep in mind throughout and after the house loan is close. You can go on to the next step. Let’s take a look at how to close a home loan account swiftly.

How to Close Your Account When Your Home Loan Term Is Up

If you’ve paid the last EMI in full, as well as all other outstanding debts:

1. Write a letter to the bank requesting the return of the original documentation you presented when you applied for the loan.
2. If you want any more documents, such as invoice copies, you must send them in your letter.
3. You should receive a response from the bank within 7 working days.
4. The lender will return your original paperwork and send you a closure letter stating that there is no outstanding balance.
5. The bank will also issue you with a NOC stating that it no longer owns your property.
6. If the bank has placed a lien on your property. You must go to the Registrar’s Office with the NOC and the bank’s representative to have it removed.
7. 7. Finally, if the bank has not placed a lien on your property. The title deeds will be return to you immediately.

How to Foreclose on a Mortgage Loan

If your financial condition has improved for any reason. And you want to prepay the full loan amount in one go and end your home loan account, follow these steps:

1. Write a letter to your lender requesting that your home loan account be foreclose. Including your home loan account number, a copy of your address proof, and a copy of your PAN card.
2. The bank will compute the overdue amount and notify the amount after receiving the application. You’ll have to pay the money by check or NEFT/RTGS.
3. You will not be charged a prepayment fee if you are foreclosing on a variable rate loan. If you’re foreclosing on a fixed-rate loan. You may be require to pay a small foreclosure charge, which varies by bank.
4. After you’ve made all of your payments. The bank will send your original paperwork back to you within a few days.
5. You will also obtain a non-disclosure agreement (NDA) declaring that you have settled all outstanding bank debts.
6. If the bank has placed a lien on your property. You must go to the Registrar’s Office with your NOC and a representative from the bank to get it remove.

Home loan account closure or foreclosure is a critical step that must be complete correctly to avoid future complications. All of the processes must be read carefully and follow during or after the closing of your home loan account.

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