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Things To Check Before Closing A Home Loan

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Prerequisites For Closing A Home Loan

As most homebuyers prefer to take a home loan, a certain section of these borrowers are looking for ways to close their loans as soon as possible by prepaying their outstanding balance

One of the most significant achievements in the life of an Indian is buying their own house. In recent years, there has been an increase in the number of young homeowners. Investing in a property is one of the best ways to get greater returns in the future. 

While there are people who are prepaying their EMIs to end their home loans soon, there is another section of people who are about to pay their last EMI for their home loan. 

However, they are not aware of the various things that one must ensure before closing their home loans and miss out on many important documents that one must possess upon the closing of their home loan. 

RealtyNXT lists the various things that one must keep in mind before closing their home loan. 

Taking Back All Original Documents

At the time of taking the loan, the borrower has to submit a few original documents. Therefore, when the time to close the loan arrives, the borrower must ensure that all these original documents must be taken back from the lender which may be the bank or any financial services company. 

Some of these documents include the original sale deed, original conveyance deed, power of attorney, possession letter, all the payment receipts, any cancelled cheques if given. It is important to take these documents because if the homeowner wants to sell the house, then all these documents will be required. 

Some banks also offer a copy of a letter mentioning a detail of all the documents that were submitted at the time of offering the loan to the borrower. This makes sure that no documents are left behind to be given to the borrower when the time to close the loan arrives. 

Borrowers must also ensure that all the original documents are intact and no pages are missing so that after the borrower signs the acknowledgement paper of receiving all the documents, the banks will not be accountable for any missing pages. 

The No Objection Certificate (NOC)

A No Objection Certificate is also known as No Dues Certificate. It is a legal document that mentions that the lender has no interest in the property, all the dues have been settled and that the lender shall not claim the property in the future. The important details regarding the homeowner and the loan account must be mentioned clearly. This includes the name of the homeowner who was the borrower, loan account number, the total amount of the loan, the starting date of the loan and the closing date. 

Homeowners must also make duplicate copies of these documents and keep a scanned copy as they are important if the homeowner wants to see the property in the future. The borrower must ensure to take this document in person instead of asking for it through the post from the lender.

Removal Of Lien On The Property

A property lien is a legal claim that is attached to a property that specifies the amount that the borrower owes the lender and it also mentions that the lender must be paid the amount before the borrower wants to sell his property. The homeowner must ensure that the lien is removed from the property when closing the loan. 

This procedure might require the owner to visit the Registrar’s Office and submit a letter for the same along with the presence of an official from the lender’s side. To verify that the lien has been removed from the property, the homeowner can apply for the encumbrance certificate which will mention that there is no encumbrance on the property.

This certificate specifies that the lender of the loan has no more legal rights on the property. 

Updating The CIbIl Score

The borrower must ensure that the lender updates his CIBIL score. CIBIL stands for Credit Information Bureau (India) Limited and was established in the year 2000. The CIBIL score is the summary of an individual’s credit score in the form of three numeric digits. This score ranges between 300 to 900 and a score above 700 is usually considered to be good. 

A good credit score ensures a greater chance for the borrower’s application to be approved for a loan. The process of updating the score usually takes around 20 to 30 days. But the homeowner must make sure that their credit report is updated within that period of time.   

Taking Back Security Cheques

When the bank takes a security cheque from the homeowner while availing the loan, then it must be returned to the homeowner during the closure of the home loan. 

These cheques are usually taken by the lender in case the borrower defaults on the payment of the EMIs. Thus it must be made sure that the lender returns these cheques.

ALSO READ: What Is The Eligibility Criteria For A Home Loan?

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