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Most people use a home loan as it can help them realise their dream of owning a home. You put off saving money to buy the home of your dreams for years. Nevertheless, regardless of your financial situation, every person who takes out a home loan with a 60 Lakh home loan EMI wants to pay it off as quickly as possible so that they may fully own the property in their name and be free of debt. The actual happiness of owning a home, however, frequently comes after the home loan of 50 Lakh home loan EMI balance has been fully repaid. In order to assist Indians to pay off their loans as quickly as possible, the Reserve Bank of India has made it feasible for borrowers to make an unlimited number of prepayments over the course of the loan without incurring any prepayment penalties. If you have paid off all the home loan instalments, it is important to know the steps on how to close your home loan account with the lender to avoid any future issues.

As soon as you have paid off your last instalment or made the final loan payment, you should begin this due diligence. You must notify your lender that you intend to finish the closing procedures after the last loan payment of 50 Lakh home loan EMI has been cleared. Make an appointment to see your lender, and bring the below checklist with you to make sure you don’t forget anything about the closing procedures.

Obtain NOC: As soon as you pay off your mortgage, ask the lender for a NOC (or NDC, which stands for “no dues certificate”). This document attests that you have fully returned the loan and that there are no unpaid debts associated with your name or loan account with 50 Lakh home loan EMI. Make sure all pertinent information is provided when requesting a NOC, including the borrower’s name, loan account number, and information on the property used as collateral. The NOC must also clearly state the property solely belongs to you and that the lender has no authority over the authority. 

Recover your original documents: Once you have paid off your home loan balance 60 Lakh home loan EMI, make sure you get the original documentation back from the lender. When you apply for a loan, the lender will often provide you with a list of papers, known as the LOD. After the loan is closed, be sure to recover all the original papers and cross-check them with this LOD. LOD often consists of documents such as bank account statements, evidence of income, title to real estate, a letter of possession, etc. Verify that the papers are intact, have not been lost, and do not have ripped pages. Keep in mind to get those security checks back as well as some lenders collect them when disbursing house loans.

Lien cancellation by the registrar: In the event that they are sceptical about your ability to repay the loan amount of 50 Lakh home loan EMI, lenders frequently place a lien against your property. By doing this, you would give the lender the authority to sell the property in the event of a loan failure in order to recoup any unpaid debt. Additionally, until the loan is finalised, the lien forbids the borrower from selling the property. In order to avoid any legal problems or difficulties with property ownership, make sure to remove this lien from your city’s municipal registrar’s office as soon as you pay back the loan. The registrar may obtain a NOC certificate from the lender before granting your request for lien termination and discharging the release deed.

Obtain an updated no-encumbrance certificate: A legal document known as an encumbrance certificate contains thorough records of all your financial activities involving the real estate pledged as collateral for a mortgage loan. Therefore, this document must show that the loan has been fully repaid when you complete your mortgage. The sub-office registrars might provide you with a document attesting that your property is free from any debts, both financial and legal. This is useful if you decide to sell your property at any point after the home loan of 60 Lakh home loan EMI is closed.

Update the database of the credit bureau with loan closure detail: When you apply for a loan or credit card, lenders often notify credit bureaus right away. The four distinct credit bureaus in the nation have records of all of your loan transactions, from disbursement to closure. Within 30 days following loan closure, make sure the lender updates the same. After 30-45 days from the day your loan was closed, check all four of your reports: CIBIL, CRIF, Experian, and Equifax. If the records are not current, you can submit a request to the bureaus, who will then get in touch with the lender to update the information. Continually follow up until you receive resolution confirmation from the agency. However, you might need to remind and follow up with the lender until it appears in your credit report when it comes to updating your credit record following loan closure.

Tracking Loan Repayment: Obtain a repayment history from the lender and check that it includes all of your large payments. A photocopy of the bank statements from which the reimbursement is made should be kept. This might come in useful if there is a disagreement with the lender, a government agency, or a credit bureau.

Note: But be ready to fork over a sizable quantity of cash to foreclose the debt. Home loan borrowers are forced to choose between saving money on the interest they pay to their bank and saving money on taxes they must pay to the government. Certain tax benefits apply to home loan, including a deduction under Section 80C for the principle paid back and a deduction under Section 24 for the interest paid. If the home is self-occupied, the interest deduction is limited to Rs 2 lakh annually. It is recommended to invest the extra cash in closing or decreasing the home loan of 60 Lakh home loan EMI if your overall interest expense exceeds the amount of the tax benefit. Naturally, if the home has been rented out, the entire interest can be claimed as a tax deduction. In such cases, it is not advisable to foreclose the loan as the tax benefits will bring down the effective interest rate. 

Conclusion

Over the past fifteen or so years, you have carefully repaid your loan amount of 60 Lakh home loan EMI balance, and it is now finally coming to an end. However, completing your mortgage involves more than just making the final payment.