Home loans are repaid in the form of loan EMIs that go on for a loan tenor mutually agreed upon by the lender and the borrower. Once the borrower has repaid the entire loan, they must collect the home loan NOC or the No Objection Certificate. In this article, we discuss everything there is to know about home loan NOC letters, such as what is this legal document and why is it important and how to obtain one. So, read on.
What is a Home Loan NOC Letter?
Home loan NOC refers to the No Objection Certificate. Many lenders also refer to this document as a No Dues Certificate. The NOC is a legal document released by a lender or borrower that states that the home loan borrower has repaid their loan in full and that they do not owe the lender any amount. The NOC letter must contain all relevant details, such as the name of the home loan borrower, their home loan account number.
The address of the property bought with the loan money, the date on which the borrower closed their loan account, etc. The NOC letter must also clearly state that the borrower does not owe their lender any money and the lender, therefore, has no right over the pledged property and that the property has been completely transferred back to the lender.
Home Loan NOC Letter: Why Is It Important?
It is important to obtain a home loan NOC for several different reasons. In this article, we discuss some of these reasons:
1. The Home Loan NOC Helps You Remove the Lien of Hypothecation from the Property
When you borrow a home loan to buy a property, your lender has the right to sell the property for loan recovery if you fail to honour your monthly EMI commitment for an extended period. Lenders are granted this right through the lien of hypothecation placed on the property. Once a borrower has repaid their loan, they must have the lien of hypothecation removed from their property.
This can only be done with the help of the home loan NOC. Once you receive your home loan NOC, visit the office of the Registrar of Properties along with one of your lender’s representatives and get the lien of hypothecation removed from your property. It is only after you do this, will the property truly belong to you and you will be able to sell it when you want.
2. It Helps You Improve Your CIBIL Score and Probability of Getting Approved for a Loan in the Future
Many different factors make up an individual’s credit score. One of these factors is the applicant’s repayment history. A clean and good repayment history helps one build a positive credit score. Which in turn, helps borrowers avail of a loan easily and on beneficial terms and conditions in the future. So, once you have repaid your loan, you must let credit information bureaus know that you have done so.
Credit information bureaus can be intimated with a home loan NOC. Once they get this document, they will upgrade your credit rating or credit score. So, once you have repaid your loan, do not forget to collect your NOC and send a copy of it to the credit information bureaus.
3. The Home Loan NOC is the Document That Will Protect You in Case of a Legal Hassle
The home loan NOC is the legal document that removes all rights your lender had over the property while you were repaying the loan. Thus, if there is ever a legal scuffle or if your lender ever claims otherwise. It is the home loan NOC letter that will protect you in court by establishing and proving your complete ownership over the pledged property.
4. It Will Help You Collect Insurance Claim
If ever your home undergoes damage and you have home loan insurance. You can collect the insurance amount and initiate repair work immediately. However, the insurance amount will come into your loan account only if you have the home loan NOC and you have repaid your loan in full. If you do not have the NOC, your insurance claim provider will send the insurance amount to your lender’s account.
How to Obtain the Home Loan NOC Letter
Generally, lenders send the home loan NOC letter to a borrower on their own after the borrower has repaid their loan. However, if the borrower does not receive this letter, due to a mistake on the part of the lender or due to the address provided in one’s home loan application file not being updated or being incorrect, the borrower can ask for the home loan NOC. The borrower is not required to submit any documents for this. If you want to obtain your home loan NOC, simply follow these steps:
- If you want your home loan NOC, go to your lender’s office and request them an NOC transference form. Fill out the form properly and submit it to your lender.
- After your lender receives your NOC letter request, they will process it. They will check if you have paid all the EMIs and cleared your loan completely. If they are satisfied, they will release the home loan NOC.
Once you receive the home loan NOC, keep it safe with you. If a home loan borrower misplaces or loses their NOC. The process to obtain a second copy is difficult and involves filing an FIR. Therefore, always keep your home loan NOC safe with you. The home loan NOC is a very important legal document.
However, many home loan borrowers either do not know about this document or forget to take it. This is a mistake that all home loan borrowers must avoid making. If you have repaid your home loan. Make it a point to collect your home loan NOC and keep it somewhere safe.
