Imagine this: You’ve been paying your home loan for years, and now you’re close to finishing it. But what does settling your home loan really involve? In this blog, we’ll explain the entire process in a simple and easy way.
Why is understanding home loan settlement important? Because settling your loan properly helps you avoid problems and ensures you get a clear property title.
Home loan settlement means repaying your loan completely. It ends your debt with the lender, and you get back important property documents. This can happen when the loan term is over or if you pay off the loan early.
The first step is to ask your lender know you want to settle the loan. You can do this by visiting the bank or contacting customer service.
Documents Required: Keep your loan account number and ID proof handy.
Pre-Closure: If you’re planning to prepay, check if there are any prepayment charges applicable.
Once you inform the lender, they will calculate the total outstanding amount, which includes:
The remaining loan principal
Accrued interest until the settlement date
Any applicable charges or fees
Always double-check the calculations and ensure there are no discrepancies.
Next, you need to gather the money to pay off the loan.
Partial Prepayment: If you’re not settling the full loan amount, you can choose to make a partial prepayment to reduce your outstanding balance and EMI.
Once the funds are arranged, visit the bank and pay the outstanding amount. You can make the payment through a cheque, demand draft, or online transfer, depending on the lender’s guidelines.
After the loan is settled, it’s very important to retrieve all the documents related to your property. These include:
Original Sale Deed: This document proves your ownership of the property.
Loan Agreement: The original agreement you signed with the bank.
No Objection Certificate (NOC): A formal letter from the bank stating that the loan has been settled and there are no pending dues.
Other relevant documents
The final step is to update your property records to reflect that the loan has been settled. This involves:
Registrar’s Office: Visit the local registrar's office to update the property records.
CIBIL Score: Make sure your loan closure is reflected in your CIBIL score. It usually updates automatically, but keep an eye on it.
Clear Property Title: The property is now legally yours, free from any lender claims.
Improved CIBIL Score: Your credit score may improve, making it easier to secure loans in the future.
Peace of Mind: You can finally enjoy your property without any financial worries!
Not Verifying Documents: Always check that all your documents are in order before leaving the bank.
Ignoring CIBIL Updates: Your loan closure should reflect on your CIBIL report. If it doesn’t, raise a dispute immediately.
Paying Unnecessary Fees: Double-check if the fees being charged are legitimate and as per the agreement.
Step | Description |
---|---|
Inform the Lender | Notify the bank of your intent to settle |
Calculate Outstanding | Confirm the total amount payable |
Arrange for Funds | Use savings, investments, or loans |
Pay the Balance | Make the payment and get a receipt |
Retrieve Documents | Collect original sale deed, NOC, etc. |
Update Records | Update property and CIBIL records |
Settling a home loan is a big step in your financial journey. By understanding the process, you can make sure everything goes smoothly. Don't forget, that keeping track of all your documents and updating your records is just as important as making the final payment.
We understand that getting a loan can be very stressful with confusing documents, unclear communication, and various other challenges. That is why we take care of your loan application process, saving you time and hassle by handling the paperwork and communicating with the loan providers.
Check the details at EazyBankLoan
Need help? Reach out at support@eazybankloan.com
Yes, you can prepay your home loan, either partially or in full, depending on your lender’s policies.
Usually, it takes about 15-30 days, but this may vary depending on the lender.
Raise a dispute with CIBIL and provide proof of loan closure from your lender.
Yes, in some cases, lenders may waive or reduce the prepayment fees if you negotiate.
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