Which is the happiest day of your life? It has to be the day you pay the last EMI on your home loan, or pre pay the full outstanding balance on your home loan. Now you feel, you truly own your home. No one can take your home from you. You feel a great burden has been lifted from your shoulders. A sense of relief…….You have paid back the last home loan EMI and closed your home loan? Is it game over….In the excitement of closing the home loan, do not miss these points.
When you avail a home loan, you have to submit certain original documents, to get your home loan sanctioned. You must collect your original documents, when you close your home loan. Some of these documents are:
Power of Attorney
You need your original documents, if you want to sell your house or avail a loan against property. When you avail a loan from a bank or a lender, the bank maintains a list of the original documents, they have taken from you. They give you a copy of the list. Your bank is now accountable for the original documents it has taken from you. Do not wait for your bank to courier your original documents. You must collect the original documents yourself, from the bank.
When you repay your loan in full and there is no outstanding loan left, your bank (lender) gives you a certificate, called the No Due Certificate. The No Due Certificate has the seal of the bank. The bank is supposed to give you the No Due Certificate, when you close your home loan. If the bank has not given you the No Due Certificate, you better ask for it.
What is the meaning of the word “Lien”? Lien means the bank reserves the right to possess and sell your property, if you default on your home loan. Nowadays banks do a due diligence check (thorough background check on your property), before sanctioning your home loan. Nowadays it is quite rare for a bank, to put lien on your property. If the bank has a slight suspicion (worry), or in case of certain backgrounds, they will put lien on your property.
You better check, if the bank has put lien on your property. If the bank has put lien on your property, ask them to help remove the lien on your property. If you do not remove the lien on your property you will not be able to sell it. You can check if the bank has removed lien on your property, by applying for a new encumbrance certificate. If your encumbrance certificate mentions there is no encumbrance on your property, then you have the legal right to sell the property.
After you close your home loan, your bank needs to update Cibil, that your home loan has been closed. Cibil makes an entry “DATE CLOSED” on your credit information report, with the date of the closure of the home loan. You need to make sure that your bank has updated cibil, with your home loan closure details.
No point in boring you with these details on such a joyous day. However it would be wise to follow these tips, when you close your home loan.
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