A home loan or a mortgage is big responsibility that an individual has to bear in his lifetime and it is big commitment to make for at least a span of 15-20 years. As a home loan borrower you have gone through all the trouble of comparing home loans and have probably selected from the best and low interest home loans in India. However, it is a debt that bears on your mind always and you want to go ahead and prepay it ahead of its scheduled tenure.
Deciding to prepay your home loan is a great step ahead for you financially and will also help you improve your credit score. However, you have to go through the prepayment process step by step and make sure you attain proper closure, so that no problems crop up in the future. Here is a step by step guide that will help you prepay your home loan.
Let your lender know about your decision
The first thing you need to do if you have decided to foreclose you loan, is let your bank know about your decision. You will need to make a written application and follow a verification procedure. Along with your cheque book, through which you will make a full and final payment, carry all your identification documents such as photo id proof, loan agreement and the likes and go prepared so that there is nothing amiss on your part. Some banks may also ask you for the source of funds by way of which you are making the prepayment. So just to be sure, carry 6 months of bank statements and salary slips as well.
After the payment is done
After your payment is done, you will be given an acknowledgement of payment. This should clearly mention that there is no principal outstanding or balance payments after you loan has been prepaid. This document should also be stamped and signed by the bank. The bank should also give you a No Objection Certificate NOC or NC at this stage, in which it is clearly stated that the lender does not have any interest in the property any longer. The NOC or NC should carry details like you name, address, home loan account number and the beginning and the closure of the loan. Apart from this, in case of unused postdated cheques that you may have given to the bank must also be collected to avoid any chances of misuse.
Collect all your original documents from the bank
Once you have cleared the entire loan amount with proper Emi Calculator India, it is time for you to ensure that you get back all the original documents you had submitted to the bank in proper condition. Scrutinize all the documents and ensure that all the pages are in order. In some cases, a page of sales deed may go missing and it will be a tedious task for you to get replaced. So before you sign the acknowledgement from the bank, make sure all the originals are in order. It is therefore a good idea to visit the bank, to collect your documents in person rather than asking the bank to send them by courier.
A mortgage is a big debt that needs to be serviced over a long period of time. If you have the means to prepay it, it is a good idea to do so, as it frees up your funds for other investments in the long run. But as we specified in this article, just having the intent to foreclose your home loan is not enough. You must ensure that you go through every a fore-mentioned step to obtain full and final closure on your home loan.