How to Close a Home Loan?
Closing a home loan is one of the best things that happen to a borrower, only followed by getting home loan approval. Home loan closure brings you relief that only now you truly own the house. When it comes to home loan closure, many borrowers don’t go through all the formalities that turn out to be a nuisance for a long time. Therefore, you should be diligent in closing your home loan, whether closing prematurely or at the end of the tenure. Here is all that you need to know about home loan closure formalities.
Closing at the end of loan tenure
When you have paid off all your preset EMIs including the last one, write a formal letter to your lender to inform them about the end of the tenure and further request to return your property documents. Most lending institutions respond to such letters within a week. And along with the response, they also issue a closure letter for your home loan.
Closing prematurely by prepayment
If you have got the funds to prepay your home loan, you must check your pending loan amount with the lender first. Providing them with the exact date, ask them to calculate your outstanding dues up to that date. You must inform your lender as per your repayment cycle – either right before the end of the cycle or 15-20 days in advance. This helps your lender to calculate the outstanding amount without hassles. Make sure that you take back all your post-dated cheques, if any, after you prepay the home loan.
Whether closing at the end of tenure or by prepayment, you must keep the following points in mind to avoid any issue later.
- Request the bank to provide you with an NOC and make sure it clearly states your name, property address and loan account number.
- After due diligence, get your original documents back from the lender that you submitted when taking a loan. Ensure that you get all the documents then and there because you have to sign an acknowledgment for receiving them.
- If your lender had put a lien on your property for the loan, get it removed from the registrar office by submitting the NOC from the lender.
- Write to your lender to inform CIBIL regarding you closing the loan successfully. This will make your credit score better in case you need credit in the future.