6 Important Things to do While Pre-Closing the Housing Loan
Being debt free and closing the home loan after repaying it completely with the principal amount and interest is oddly satisfying for anyone. Completing the repayment tenure prematurely frees an individual from a huge financial obligation and he/she need not worry about monthly installments from then.
In between all this rush and excitement of closing the loan, we often tend to miss the most important things. Usually, these important things range from documents to update of certain fiscal reports. Here are some of the things that you should take care of while pre-closing the housing loan after repayment:
1. Retrieve back all the original documents:
After paying back the loan completely and closing the loan, the lender which, provided the financial aid should give back all the original documents involved as collateral. All the documents related to the property should be collected back along with an acknowledgment from the bank or financial institution that they have been received.
These documents are important because they are mandatory for transfer of title deeds or for mortgage purposes. For instance, if I wanted to sell one of my apartments in Pallavaram that I have purchased under a housing loan, I should have the original title deed documents, which are obtained after pre-closing the housing loan. The bank should provide these in a good condition and the receipt of acknowledgment should only be validated with a signature when you are sure that they are intact.
2. Get the No Objection Certificate while Pre-Closing the housing loan:
NOC is a legal certificate given by the bank or financial institution after the closure of the loan and it states that there are no outstanding debts to be paid by the applicant for the loan. Whenever a loan is paid off and closed, the No Objection Certificate must be obtained from the respective lender. If the applicant wants to avail another loan or credit in the future, he/she will be asked for the NOC from the previous lender.
3. Obtain the Encumbrance Certificate:
Like a NOC obtained from the lender, the EC or Encumbrance Certificate is obtained from the government. This certificate validates that the property stated in that is free from any legal liabilities and monetary obligations. After the pre-closing the housing loan, EC is obtained and the property can be sold under the free title and the transfer of ownership will be simple.
4. Get the security cheques back:
Banks and financial institutions that provide the loan usually ask for few cheques for security during the application of the loan. These security cheques should be retrieved back after repaying the loan completely.
5. Make sure that the credit report is revised:
After repaying the home loan amount, it is the borrower’s duty to see if the credit report is updated. Keep in contact with the bank to make sure that the report is updated about the complete repayment of the home loan principal along with the interest. Through the agency that is responsible for this action, it takes at least 1 to 2 months for this to be done.
6. Terminate the lien right on the property:
When the loan is applied, the owner of the property gives the lender a legal right called lien that gives the lender the right to seize the property under non-repayment. This legal right act as a guarantee to the lender that the borrower has an obligation to repay the loan periodically.
After finishing the repayment and pre-closing the housing loan, the applicant should make sure that the lien is terminated for the property under discussion. At this point of time, the banker might also be required at the registrar’s office to complete the process. Post-termination of the lien, the closing process of the housing loan is complete.