Home loan

Real estate loan: paid off your loan? Do These Five Things Now


Becoming a debt-free homeowner is a financial feat. This relieves you of having to pay EMI month after month, and you have the satisfaction that your house is now completely yours. However, you can’t afford to skip some due diligence when closing your home loan. The task may seem a bit tedious, but it will protect you from all legal disputes related to the loan after your debt is settled.

Here are five things you should do when closing your home loan.

Collect original property documents from the lender

A home loan is a secured loan, so you mortgage your property when you borrow money from banks or other financial institutions. You must submit all your original property documents to financial institutions until you fully repay your loan. When you close your home loan, be sure to collect all original documents given to the lender at the time of loan disbursement. These documents typically include the Bill of Sale, Builder-Buyer Agreement, Letter of Assignment, Letter of Possession, Agreement of Sale, and any other documents submitted with the lender. Make sure the documents are intact and returned to you in good condition. It would be useful to check page by page.

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Get a free certificate

The certificate of non-contribution is one of the most important documents. You must collect it from the lender immediately after your home loan has been paid in full. This document states that you have paid all your arrears and that the lender has no rights to the mortgaged property with him at the time of disbursement of the loan. Check this document carefully and see if the details of the property, your name, etc., are correctly mentioned. This document will ensure that there is no dispute with the lender regarding dues in the future.

Soumee Bhatt, General Counsel, Bankbazaar.com, explains: “The ‘Certificate of No Contribution’ will save you legal trouble. It guarantees that you will not have any disputes in the future with the lender regarding your loan, which you have already repaid in full. You can enjoy your property without worrying about authorizations from the financial institution.

Obtain a lien on the deleted property

Lenders add a lien to the property when you borrow money to buy a home. It protects the rights of the lender and prevents the borrower from selling the property until the mortgage is fully paid off. Be sure to remove the lien to enjoy an absolute right to your property. Once the lien is removed, you can sell the property hassle-free.

Obtain a no-charge certificate

The charge certificate contains records of all financial transactions related to your property. The No Charge Certificate, on the other hand, is a legal document that states that there are no charges registered against a property. You need to make sure that once you settle your dues with the lender, that refund needs to be reflected in the charge certificate, so there are no issues later, and you should be able to get a non-charge certificate. This ensures that the property is free from monetary and legal liability.

Check if your credit reports are up to date

Every time you take out a loan, the same thing is reflected in your credit report. This has an impact on your new loans. It is advisable to update your credit report. This will help your credit score improve after you pay off your loan. It may take some time to update your records, but it’s worth it to make sure your records don’t show the loan you’ve already paid. You can check your credit report regularly to make sure your records are up to date.

Adhil Shetty, CEO of Bankbazaar.com, says, “Once you’ve settled your home loan, it makes sense to update your credit reports. Keep track of your credit report and have the paid loan removed from your records. This step will ensure that your financial borrowings are updated with the current situation and will open up opportunities for you to borrow again should the need arise.

Settling a home loan is a matter of pride for many borrowers, but ignoring the due diligence steps mentioned above can lead to litigation if the lender makes mistakes on their file. Property records can vary from state to state in India, so you should have a list of the documents you have submitted to the lender; the same can be useful when you ask to get them back after the loan has been paid in full. Do not ignore the required documents and be proactive in removing all your doubts about your mortgaged property at the time of repayment.

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