Paying the final installment of your Home Loan is a pleasant feeling. Your house becomes free from all encumbrances as you enjoy complete ownership of your home. You have taken a lot of effort in securing the home loan and repaying the monthly installments. Your efforts bear fruit when you close the home loan. However, your responsibility does not end with paying the last EMI (Equated Monthly Instalment). Ensure that you complete the following formalities at the earliest.
Obtain a No-Dues Certificate from Your Lender
The first thing to do on closing a Home Loan is to obtain a No-Dues certificate from your lender. The letter should explicitly mention your property details along with loan account number and sanctioned amount. It should also state that the lender does not have any rights over the property. The letter should contain the date of starting as well as the closing of the loan. Make sufficient photocopies of the document as it can be beneficial in the future.
Collect the Original Title Deeds from the Lender
You have deposited the original title deeds of the property with the lender at the time of creation of the equitable mortgage. Now that you have closed the Home Loan, you should receive your documents back. Follow up with the lender and get your documents as quickly as possible. You have the copy of the Memorandum of Deposit of Title Deeds (MOD) with you. Compare each document with the ones mentioned in the list. Check out the pages of the original title deeds. It is better to be cautious in this regard. Even a loss of one page can cause a lot of problems.
Follow Up with the Lender to Cancel the Equitable Mortgage
The law stipulates that you register the equitable mortgage with the respective Sub-Registrar’s office. At the time of relinquishment of the charge, it is the responsibility of the lender to cancel the equitable mortgage and update the records with the Sub-Registrar. It entails the execution of a specific document known as ‘Cancellation of Memorandum of Deposit of Title deeds.’ The official from the lending institution should execute this document in the presence of the Sub Registrar. It completes the process of relinquishment of charge of the lender. The entry on the encumbrance certificate ensures that you are the rightful owner of the property and the title deeds are in your possession. Maintain the MOD as well as the cancellation of MOD documents carefully. You require them whenever you carry out any transfer of an interest in the property.
Obtain the Updated Encumbrance Certificate (EC)
Once the cancellation process is over, you should proceed to obtain the updated copy of the encumbrance certificate. It re-establishes the chain of ownership. You have to be very careful while dealing with matters regarding the property. You require the EC when you transfer or sell your property in the future. The updated EC will be useful to the prospective buyers as well when they Apply for a Home Loan.
Ensure Satisfaction of Charge with CERSAI
The lender has the responsibility of registering the charge of the equitable mortgage with the Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI). You should follow up with the lender and ensure that they relinquish their charge with CERSAI. It does not take more than five minutes to do so. Obtain a certificate from your lender that they have completed the process of satisfaction of charge with CERSAI. It is useful when you transfer the interest in the property or sell it.
Ensure Updating of Records in Your Credit History
Usually, it is an automatic process. However, it is your responsibility to ensure that the lender updates your records with the credit bureaus. Take out your credit report six months after you close your Home Loan to verify that the account is in ‘Closed Status.’It plays a crucial role in determining your credit score.
Better to Do Things in Time
It is essential for you to complete these tasks as quickly as possible. Things can get difficult with the passage of time. Officials in the lending institution change over a period. It can become difficult for you to establish the rapport with the new officials and persuade them to complete the formalities.
Secondly, property matters are delicate issues. Disputes can arise as the days pass. Completing these formalities in time is advisable. Follow the same procedure even when you opt for a Home Loan foreclosure or a Home Loan Balance Transfer.
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