5 Mins March 22, 2022
You have diligently paid off your home loan over the last 15 odd years and now it is finally coming to an end. Congratulations! You have created an asset that is yours for life that can even be passed on to the next generation. But there is more to closing your home loan than merely paying the last monthly instalment. Let us see how 49-year-old Avinash Shastri from Lucknow, closed his home loan successfully.
Avinash, an employee with a public sector undertaking and Archana, a school teacher, had purchased their flat almost two decades ago. Over this period, the couple saved money and paid off all their home loan EMIs on time. Now they are poised to pay the final tranche of their EMI.
An ecstatic Avinash mentioned this to his friend Manish. Manish informed him that closing a home loan should ideally involve several steps beyond just paying the last EMI to the bank.
This is what Avinash should do, in addition to paying off the last EMI:
No Dues Certificate: The first step is to confirm from the lender that no dues of the loan are pending, and the entire principal and interest has been paid off.
Non-Encumbrance Certificate: This is a legal document containing detailed records of all financial transactions related to the property. It is crucial that Avinash ensures this is updated. Doing so will reflect that the home loan has been settled fully. This certificate will be vital if and when Avinash wants to sell the property as an encumbered status will lower its valuation.
Collect all original documents from the lender: When Avinash took a home loan, he had to submit original papers of his flat to the lender, including the sale deed, the title deed, loan agreement and power of attorney. Avinash should check and ensure that all these documents are in good condition and all pages were intact. This is essential because the papers have been lying with the lender for 20 years, i.e. the tenure of the loan.
[Also Read: What Type of Home Loan is the Best one for You?]
Removal of lien on the property: Some lenders tend to put a lien on the property with the Registrar's office. This kind of legal restriction prevents the flat from being sold when a loan is outstanding. If Avinash’s lender had imposed such a lien on his home, he should ensure that it is removed.
Update credit records: Every loan that Avinash takes and repays fully and on time helps his credit score. Typically, it takes about a month to update records with credit bureaus like CIBIL. Avinash should make sure that records are updated on time as it will help in availing of debt in the future.
Figure out how to invest the erstwhile EMI amount: While not strictly a part of the home loan closure process, Avinash should also look at his financial planning. He has been paying an EMI for the last two decades. Now that the home loan is paid, Avinash should figure out how best to invest the amount he was paying in EMI. This will ensure that the extra money in hand is not spent on unnecessary expenses now that the EMI would stop.
If you have taken a home loan from Axis Bank and are about to close it, contact your relationship manager, they will help you navigate all these steps without too many hassles.
For more information on home loan eligibility, and home loan interest rates, visit us online.
Disclaimer: The Source, a content creation and curation firm has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.