A home loan is a loan provided by financial institutions to help you buy your own house by using it as collateral. Once you have completed paying the last EMI of your home loan, before being relaxed from the repayment process of the loan, just ensure completion of all the closure formalities of the loan. The process of home loan closure is just as important as the process of applying for a housing loan, as failure to comply with the closure process of the loan may put you in trouble in the future. This is where you need to be aware of the home loan NOC, which is a loan closure process.
What Is A Home Loan NOC?
After the closure of the home loan, it is necessary to collect the original title deeds and other property-related documents from the lender, along with the NOC. A home loan NOC is a legal document issued by the loan lender that mentions the completion of your loan interest to the lender. It also contains certain other details like your name, account number of the loan, property address, date of loan closure, and many other details. NOC confirms that no one except you has the legal right over the collateral property, and the property has been transferred to you.
The importance of home loans NOC
The following are the importance of home loan NOC:
- Improves the credit score- On completion of the instant loan for a home, NOC needs to be submitted to CIBIL, and CIBIL updates your credit profile database, which improves your credit score if you don’t have any previous loans pending. A good credit score helps you to get a new loan in the future if needed.
- Puts a stop to disputes- NOC secures you from any future dispute with your lender with regard to the repayment of the loan and also stops anyone from making faulty claims over the collateral property.
- Removal of lien- NOC documents have to be submitted to the Registrar of the properties in order to remove the lien of hypothecation from the property and get the title in deeds copy in your name.
- Helps to sell the property- During the application for the best housing loan, you will need to submit some documents to the lender. During the loan closure, NOC assists you in getting those documents from your lender that are required for the sale of your property if you intend to sell it in the future.
- Helps to receive, if any, insurance claims exist- The NOC makes sure that the lender has no more charge over the property. So the insurance claim can be received by you if there is any property destruction. The NOC confirms the cancellation of the assignment in favour of the lender. Hence, the payment of the claim is made by the insurance company, to you, instead of the lender.
Is NOC Enough to Absolve The Charge Of The Lender Over The Property?
NOC is an add-on document, so it alone is insufficient to absolve the lender’s charge over the property. The lender must submit the NOC copy to the sub registrar’s office along with the execution of the ‘Cancellation of the MOD’. In addition to getting the equitable mortgage, which is cancelled by the sub-registrar, the lender must also transfer the property interest from the lender to the original owner, i.e., the borrower.
Procedure to get noc:
After the complete repayment of the house loans, the home loan NOC is generally sent by the lenders to your documented address via registered post. But the NOC-obtaining procedure may vary from lender to lender. Most lenders offer the option of applying for a home loan online, so even the NOC can be obtained online using the customer portal.
These are the basic steps to follow to obtain your NOC:
- Upon completing your best home loan payment, approach your lender and fill out an application to apply for NOC.
- The lender verifies your NOC application on the basis of the information provided by you.
- Once the application form is successfully verified and processed, you obtain the NOC either online or by having it sent by the lender to the address provided in the NOC application through registered post.
However, if you do not receive the home loan NOC at the specified time, you may check the status of the NOC with your lender.
On the other hand, you can also ask the lender to get it in person.
What if we misplace the NOC?
NOC is a prime document that is to be kept very safely, preferably to be kept with the property’s original title deeds. However, if you still lose it due to any unforeseen reason, then the following steps need to be followed:
- A complaint has to be lodged at the local police station, and an FIR copy needs to be obtained.
- Take the FIR copy to the lender and apply for a home loan NOC, providing the details of the loan transaction.
- It takes time for the lender to issue a duplicate NOC, as a search in the sub-registrar office is needed.
- Lenders have panel advocates to do this job.
- Once the lender receives the legal search report, it issues the duplicate NOC.
- A lender can mention “duplicate NOC in place of original lost by property owner” when they issue the home loan NOC.
Consequences of not getting an noc
The sub-registrar will not register the “Cancellation of MOD” document with respect to the absence of the home loan NOC. It means the mortgage lender has a charge on the property, which prevents you from transferring an interest in it or selling it.
Now that you have a better understanding of the significance of a home loan NOC, you will also understand why you should not delay the loan closing process after you pay your last EMI. The loan closure process and obtaining of the NOC has to be completed within a specified time; any delay on your part can cause many complications at a later date.
One important aspect to be taken care of while receiving the NOC is to check whether the document contains all the relevant details, like the details of your house property and the loan closure, it has authentic validity, and the CIBIL database should be updated.
While searching for a financial institution to apply for a house loan, the factors that usually concern you are the cheapest loan, immediate sanction, and so on. You should also look for lenders with whom home loan NOC compliance is an easy process.