Repaid your home loan? Here is what you must do now

[ecis2016.org] We examine the important tasks that a home loan borrower must perform, as soon as he has paid the last EMI

It takes years of financial discipline and diligent planning, to be finally able to repay a home loan, which typically has a tenure of between 10 and 30 years. Owing to this huge liability, one may often not able to experiment with financial instruments that offer higher earning potential. Even after the last EMI is paid, an absolute closure of the loan is yet to be reached. There are several high-priority tasks that a home loan borrower must perform, as soon as s/he has paid the last of his EMI.

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Visit your home branch

After the last of your EMIs is paid, call up your home branch and fix a time, when you can make a visit to collect your documents. Recall here that at the time of granting you the loan, the lender would have taken possession the originally registered sale deed as a collateral, apart from some cancelled cheques. They have to return this crucially important document, as soon as you close the loan. Since the loan has been paid, the bank will also have to issue a non-encumbrance certificate or a no-dues certificate, stating the liability no more exists.

Also read: What is an encumbrance certificate?

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Do note that this job might not be accomplished in one visit, since all such property documents are kept safe in the bank’s central repository and must be brought back to your branch. Hence, be prepared to make a couple of visits to your branch office, before you finally receive these documents. When you receive the documents, ensure that all the pages in the sale/title/mother deed are there and nothing is missing.

Note here that the bank would ask you to sign an undertaking, stating that it has handed over the original property documents to you on the specified date and that it was no more responsible in case something were to happen to the documents.

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Inform your insurer

You may have bought home insurance and home loan insurance, along with the home loan product. If both these policies are bought from the same lender, you may not have to make further visits to bank branches. However, if that is not the case, you will have to get in touch with your insurer.

While the home loan insurance policy lapses as soon as the loan is repaid, a home insurance policy remains effective throughout your lifetime. The insurer must be informed, in case the property is free from financial liabilities. This has to be done to make sure you are now the absolute owner of the property and that in case of any damages to the property, you will be the only claimant for the insurance money. At this point, the nil-encumbrance certificate would come handy.

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Contact the sub-registrar’s office

Banks put a lien on the property, in order to restrain the borrower from initiating any sale and it finds a mention in the property’s registration records. The lien, which is actually the lender’s legal claim on the property, is removed as and when the loan-related liability is over. Since this information must reflect in the government’s records, the buyer, along with a representative from the bank, will have to visit the sub-registrar’s office where the property was registered. Within 10 days of doing this, your property will be free from any lien and the same would reflect in the registration records.

Check your updated credit history

From time to time, credit bureaus update a borrower’s credit records. The fact that you have repaid your home loan should start reflecting in your credit history, soon after the bank issues the no-dues certificate along with a no-encumbrance certificate. If you find that your current credit history does not reflect the same, get in touch with your home branch and check if they passed on the information to the credit bureaus.

Also see: Nine assumptions that will harm a home buyer’s credit score

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