Closing A Homeloan Ashish Gupta

Closing a homeloan Ashish Gupta

by

Abhinav kumar

You always have the option of closing a

home loan.

This is done at the end of the tenure, or before the specified tenure if you have an alternate source of funds. One may have excess funds or may be selling off the property. Either way, the closure of the loan account is almost as important as opening it.

While initially submitting your documents to the bank, it is advisable to get an acknowledgement of the number of documents that you have submitted. This will help you prove your point just in case you find that certain documents are missing at the time of the loan closure. In case there has been a change of address, you should get it updated in the bank s records.

Process

If you have paid off the last EMI and all the outstanding payments have been made, you need to write a letter to the bank stating the facts and asking for the return of the original documents that you submitted at the time of taking the loan. If you require other papers including invoice copies, you could include these in your request to the bank.

The bank generally responds to such requests in about seven working days. The bank returns your original documents and issues a closure letter or a no-objection certificate indicating that there is no outstanding amount to be paid. It will also issue a no-objection certificate that states the termination of the hypothecation agreement that you had entered into with the bank. It is a confirmation that the bank no longer has an interest in the

property.

In the case of a home loan where the mortgage is registered, the no-objection certificate needs to be taken to the Registrar of Properties to get the lien removed. Both the borrower as well as a representative of the bank needs to do this at the same time. But if the mortgage is not registered, the bank simply returns the title deeds.

Prepayment

In the case of prepayment of a loan, you need to start the entire process with a request to find out the outstanding amount, followed by one stating your inclination to pay the entire amount by a particular date. Also, you need to find out the interest amount you need to pay, particularly if you decide to close the loan in the middle of your monthly repayment cycle or after the fixed date on which the bank calculates interest.

Check the interest calculation in addition to the outstanding amount to ensure there is no confusion. Also, if you have given post-dated cheques and decide to prepay the loan, you need to let the bank know in advance, so that they can return the post-dated cheques with the other documents. In case the postdated cheques have already been sent for clearance by the bank, they will ensure they are eventually returned to you. It is best to let the bank know 15 days before your next payment date.

Prepayment fee

Most banks do not levy a prepayment fee if the funds have come from the borrower s own resources such as from the

sale of a property.

However, to avail of this benefit, you need to be able to show proof of the source of the income.

Courtesy: Times Property 27th Feb 2010

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