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How to Close your Home Loan

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Whether you are prepaying the loan or paying the last instalment of the housing loan, ensure you have arrived at the right closure.


Bankers say one out of every six home loan borrowers does not bother to take back their documents even after repaying the entire loan amount. The borrowers' attitude is that the biggest liability is off my head. The rule of the thumb is that you get back all the documents from the bank/HFC which you submit at the time of applying for the loan. These include the loan papers, title insurance, statement, documents of owner's coverage, and other contact papers.


Over and above that, you have to get a no-due certificate/settlement statement. This is a written certificate from the lender, which states you do not have any outstanding dues on your housing loan. This letter has gained significance because of the recent formation of the credit bureau. In such long-tenure loans which span over 120 to 180 months, a borrower often tends to overlook if any cheque has been delayed or bounced for some reason. Then a bank/HFC slaps some penalty, which costs the borrower a few thousands of rupees. Now, if you don't make note of these additional charges and defaults on them, then the bank/HFC terms him/her as a defaulter. It doesn't matter even if you have repaid the principal and the interest component of the loan regularly, you may still be defined as a defaulter.


Sometimes a housing loan may mature now, which probably started 10-15 years ago. Since the registration of the property was not computerised then, the registrar may not send the required documents. Then a HFC/bank has to follow up with the registrar to get all the required documents for the termination of the loan.


Another important document you have to possess once you pay off your home loan is the 'title of deeds'. This document traces the title of the property for a minimum period of 13 years. This document is essential if you want to sell your house/property. Typically, as the first step, any prospective buyer looks at the title deeds to confirm if the land is in your name and if you have the full right to sell it. In fact, all prospective buyers insist on seeing the original deed and not just the photocopies. Most sellers pledge the original deed at the time of availing of a home loan.

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