Most people utilise a home loan because it can enable them to fulfill their desire for home ownership. You put off saving enough money for years in order to one day purchase the house of your dreams. But everyone who obtains an Indian bank home loan with an EMI wants to pay it off as soon as possible in order to fully own the property in their name and be debt-free. This is true regardless of your financial condition. The true joy of home ownership, however, typically doesn’t surface until the final 50 Lakh Home Loan EMI have been paid.
The Reserve Bank of India has made it feasible for borrowers to make an unlimited number of prepayments over the period of the loan without incurring any prepayment penalties in an effort to help Indians pay off their debts as quickly as possible. Once all of your mortgage payments have been made, knowing how to shut your loan account with the lender might help you prevent further problems. You should start this due diligence as soon as your last instalment or loan payment has been paid.
Once the final loan payment of the 50 Lakh Home Loan EMIÂ has been made, you must inform your lender that you want to finish the closing procedures. Make an appointment with your lender and bring the following checklist with you to ensure you don’t forget anything important about the closing procedure.
Obtain a NOC by contacting the lender after paying off your mortgage (or NDC, which stands for “no dues certificate”)
This certificate confirms that you have fully repaid the loan and that no outstanding debts are associated with your name or the loan account used to pay the 50 Lakh Home Loan EMI. When seeking a NOC, make sure to include all relevant information, such as the borrower’s name, loan account number, and specifics about the security item. You must expressly say in the NOC that you are the only owner of the property and that the lender has no control over your authority.
Obtain your original documentation from the lender
Make sure you ask the lender for your original documents. The lender will normally give you a list of documents, also referred to as the LOD, when you apply for a loan. Collect all original documents after the loan is closed so you may compare them to this LOD. Letters of possession, real estate titles, bank account records, income tax filings, and other papers are frequently included with LOD. Check the files to see if any pages are missing, torn, or otherwise damaged. Don’t forget to have your security checks returned because certain lenders require them in order to grant mortgages for homes.
Lien cancellation by the registrar
Your lender may place a lien on your property if they have any doubts about your ability to pay the 50 Lakh Home Loan EMI. In the event of a loan default, by doing this, you would grant the lender the authority to sell the property in order to recoup any outstanding debt. The lien also prevents the borrower from selling the house before the debt is paid back. When you repay the debt, be sure to have this lien removed from your city’s municipal registrar’s office to avoid any legal or property ownership issues. Before processing your request for lien termination and cancelling the release deed, the registrar may require a NOC certificate from the lender.
It is necessary to obtain a current certificate of no encumbrance
Your financial transactions regarding the property that was given up as collateral for a mortgage loan are detailed in a legal document called as an encumbrance certificate. Therefore, after you pay off your mortgage, you must provide this documents to prove that the loan has been properly returned. You may receive a certificate from the sub-office registrars attesting to the fact that your property is clear of all monetary and legal debts. If you ever decide to sell your property after paying off the mortgage or Indian bank home loan EMIs, this could be useful.
Refresh the information on loan defaults in the credit bureau’s database
Lenders often tell credit bureaus right away when you apply for a loan or credit card. All of your loan transactions, from disbursement to closure, are tracked by one of the four national credit bureaus. Within 30 days of the transaction closing, make sure the lender updates the data. Check all four of your credit reports from CIBIL, CRIF, Experian, and Equifax after 30-45 days have passed from the day your loan was closed. You can submit a request to the bureaus, who will then contact the lender to correct the data if the records are out-of-date. After the organisation says that the issue has been rectified, keep checking in. In order to update your credit history once a loan is paid off, you might need to remind the lender and follow up with them until the revised information appears in your credit report.
Monitoring Loan Repayment
Ask the lender for a repayment history, and make sure it covers all of your significant payments. The bank statements that were utilised to calculate the refund should be preserved in a photocopy. If there is a disagreement with the lender, a coworker, or a credit bureau, this could be helpful.
But be prepared to spend a sizable sum of money if you wish to foreclose on the debt. Indian bank home loan borrowers must decide whether to spend less on the taxes they must to the government or on the interest they must pay their bank. Mortgages come with a number of tax advantages, including a deduction under Section 80C for the principle repaid and a deduction under Section 24 for the interest paid. The annual interest deduction for self-occupied homes is capped at Rs. 2 lakh. If your total interest expense exceeds the value of the tax benefit, it is advised to utilise the excess cash to pay off the house loan or reduce the EMI. Naturally, the entire interest can be written off as a tax deduction if the house has been rented out. Since the tax benefits will lower the actual interest rate in these instances, foreclosure is not a wise move.
Final words
You have dutifully paid down your Indian bank home loan balance over the previous fifteen or so years, and it is now finally coming to a conclusion. Making the last payment, though, won’t be enough to pay off your mortgage.