If you wish to avail a home loan, you must be aware of the various procedures involved both before applying for a loan and after repaying the loan. Read on to know the importance of getting a NOC after you repay the full home loan amount.
If you have repaid the entire home loan, you would be elated that you have a huge responsibility off your shoulder. You may feel you need not run around the lender, and focus on other important goals in life. But, amidst the feeling of joy and delight, you must not forget to undertake one more important task, which is to get the NOC or No Objection Certificate from your lender.
What is NOC?
The NOC, which is also commonly known as NDC (No Dues Certificate) is a legal document that you must procure from the lending institution after you repay your last home loan EMI. The document essentially states that you no longer have any dues towards the lender.
A lot of home loan borrowers are not aware of this crucial process. The lenders do not provide the certificate voluntarily; you must request the lender for it. Once you get the certificate, you must submit a copy of it to the registrar of properties, and only then the lien of hypothecation is struck off.
Why is obtaining a NOC essential?
- If you fail to get the NOC from the lender and submit it to the registrar of the property, the lender will continue to be the owner of the property despite you have repaid the entire loan. Also, unless you have the NOC, you cannot sell the property to anyone.
- Getting the No Objection Certificate is like clearing the last hurdle toward achieving a clean credit score. So, if you are repaid the loan and wish to close the loan account, you must take the NOC from the lender. A loan account is wholly closed only after you have received the NOC. Often the loan borrowers request the lender to issue a no-objection certificate but fail to follow up. This kind of complacency can harm your creditworthiness.
- When you request for a NOC, make sure that you diligently follow up with the lender. You can place a request for the certificate online through the lender’s website, or you can personally visit the lender’s branch. When you receive the document, make sure that you review it carefully and check if all the loan-related details are listed correctly, and it has the words ‘No Objection’ mentioned on it. Once you receive the NOC, your CIBIL score will be automatically updated by the lender, and you will be marked as a trustworthy borrower.
- When you apply for a loan, you must purchase an insurance cover against the loan; it is a part of the home loan application When you get the NOC after repaying the loan, the lender will not have any charge over the property. This means, in case of destruction of the property, the insurance company will pay the settlement to you instead of the lender.
So, once you have repaid the last instalment of your home loan EMI make sure that you contact the lender for NOC within the stipulated time. Getting the NOC promptly will help you take full ownership of the property. Also, when you have the NOC, you can sell the property or even apply for a new home loan as the lender and the buyer will ask for the NOC.