Home loan is a financial solution acquired from a lender by handing over your property as collateral. In India the borrowing option entitles us to purchase a flat, plot, or property by pledging it. Home loan can also be taken to make major renovations, repair, or constructing a house.
These are high-value finance at low interest rates, which can be repaid over a long tenor of up to 20 years. Over 80% of the people living in urban areas opt for home loan to buy a house. Paying off the EMIs for your Home Loan completely, is a joyous moment and also brings much relief. When you are able to prepay your loan, it allows you the freedom from the burden of monthly installments and you can now divert that amount for other purposes, along with having your own home. Amidst all the excitement, there are certain necessary facts to be kept in mind if you decide to Prepay your loan amount.
Documents submitted initially while signing the agreement for the home loan such as the mother deed, money deed, possession letter, power of attorney and also the posted dated checks should be collected back from the lender, if you decide on prepaying your home loan or even for home loan transfer. Any absence of document can lead to problems later if you want to sell your property or transfer it to others name.
Additional reading: AN OVERVIEW ON PRE PAYMENT OF HOME LOAN
One of the more relevant document for closing, pre-paying or transferring your home loan is the No Objection certificate from your lender. A NOC implies that bank has cleared your property as debt free and now you have complete possession of the property and also that the bank has no association with your property anymore. Check that the NOC has the correct details of the owner’s name, address and description of the property and the date of change of ownership.
CIBIL score depicts your financial credits, borrowings and your repayments. A good CIBIL represents your credit worthiness, which will always make it easier for you to get a loan. As this is so important, you should be aware about your credit score and see that it gets updated on time after your loan is closed. Make sure that your lender sends your loan repayment history to the credit authorities.
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Keep abreast of all the details of the final settlement terms and condition,when you pre-close your home loan. These days most of the lenders have no pre-closure charges, but it comes with certain terms and condition about which you should be aware of in advance.
Once the home loan closure amount has been paid, it is important to collect the detailed home loan statement of your home loan. It is important as it reveals all details of your repayments along with the dates and amount.
An encumbrance certificate is proof that the house or property mentioned is free of any financial debt and other lawful obligations. Once the Encumbrance certificate is provided, the property is in your possession and it can be sold as a free title. It can be obtained from the registrar’s office.