|Obtaining a NOC is a most important foreclosure procedure which is as important as availing a housing loan. Many borrowers sit back after paying their last home loan EMI unaware of the fact that the home loan is not yet closed unless it is legally documented by the lender. NOC is this legal document which claims that the borrower does not owe more to the lender.|
In our previous post we have already discussed in brief about NOC, its significance & when- in what context the NOC is mandatory and needs to be obtained. (Click here to read the complete post). In the present blog we will highlight the magnitude of NOC in particular to the closure of home loans.
No Objection Certificate Meaning
On closing the home loan, it is important the borrower takes 2 important documents from the lender Bank/NBFC/HFC: 1) The original documents which are in lender’s custody pledged for availing the home loan & 2) Home loan no due certificate i.e. No objection certificate (NOC).
Also referred to as no dues certificate, an NOC is a legal document which is to be obtained from a lender once the home loan is completely/fully paid off. (By fully paid off means, with the repayment of the entire principal and interest amount thereon, any closure charges if any, late payments or other overdue amount or outstanding dues if any are also paid back). It acts as a legal proof which claims that the borrower has paid off his home loan completely and does not owe any more to the lender and that your property is now collateral free. The lender therefore does not have any legal rights on the property collateral henceforth. (Collateral is the house property that is pledged with the lender Bank/NBFC/HFC, against which the lender provides funds to the borrower for purchasing the house in the form of home loans)
Why Is it Important To Obtain The NOC Post Closure Of Home Loan?
It is observed that owing to ignorance, often the borrowers fail to obtain the NOC for loan closure from their lender upon completion of their home loan. On the other hand, it is also noticed that very little, however, is spoken on what needs to be done upon successful closure/ completion of home loan. Therefore, let us understand the prominence of obtaining the home loan closure NOC once the home loan is foreclosed.
- NOC exonerates all rights of the lender on the collateral
Till the NOC is received the lender reserves the rights on the property of the borrower, pledged to avail the home loan. Once the house loan NOC is received the lender no longer will be the custodian of the property pledged, NOC removes the lien from the property, and the borrower then owns a debt free property.
- NOC impact on CIBIL scores – improves the credit ratings of the borrower
CIBIL has an important role to play in the lending business. The lender ascertains the risk for funding on the basis of CIBIL scores of the borrower. Hence it is of vital importance for the borrower to maintain a good credit history and to make timely repayments of his loans in order to maintain the CIBIL scores. Improved ratings also form the basis for future loan borrowings by the borrower. Any delay or overdue payments hampers the CIBIL score and hence if the NOC is not obtained from the lender the CIBIL records will reflect that the home loan is not yet closed and will reduce the credit ratings of the borrower. (Read How To Apply For Home Loan With Bad CIBIL Score). At times the lender also fails to submit the closure information to CIBIL, which further diminishes the credit scores, therefore NOC is important to prove that the loan is indeed repaid.
Also read: CIBIL & its significance in home loan.
- NOC helps in hassle free selling of the property
The lender is the legal custodian of the property pledged and hence reserves the legal rights on the property. If the NOC is not obtained the lender continues to own legal rights on the property and therefore the borrower cannot sell the property even though he remains the owner of the property. By obtaining the NOC from the lender the borrower can hassle free sell his property without any legal dispute.
- NOC also helps to get the insurance claim settled (if any) hence it is important the borrower requests bank for home loan NOC on foreclosing the loan.
Remember, if NOC is not obtained, the dues might reflect outstanding and the lender might ask to clear the outstanding amount which is already paid by the borrower. At times in the dispute the lender may also take legal action against the borrower for non-payment of the outstanding dues, if the NOC is not obtained.
What is mentioned in the no objection certificate format for bank loan?
The NOC for loan closure format contains the following information:
- The name and the property address of the borrower.
- Date of issuing the NOC.
- Name and address of the lender Bank/NBFC/HFC.
- Loan details- home loan amount taken, loan account number, loan closure date.
How to obtain the NOC from a lender?
Generally, the lender sends the NOC via post to the registered address i.e. the address mentioned on the loan application with the lender. Sometimes the borrower has to raise a written request for home loan NOC to the lender. Since the NOC is sent via post it is important the borrower updates the lender for any change in his communication address if he has moved to a different address and updates his address in the lender records. Alternatively, he can also visit the lender branch to collect the NOC in person.
Now-a-days some lender Banks/NBFCs/HFCs also provide the electronic way of downloading the NOC. The borrower can simply visit the online portal / official website of the lender or login through the lender’s app and instantly download the NOC letter format for bank after paying the last EMI for home loan, alternately he can also have it forwarded to his registered email address.
Remember, if the property is registered with the registrar, the borrower along-with the representative from the lender Bank/NBFC/HFC has to visit the registrar with the NOC (to be submitted with the registrar), in order to get the lien mark removed from the property. (The lenders prefer for registration of the mortgage document when they are skeptical of the borrower’s credibility or his property.)
(Contact Loanfasttrack to know how to obtain HDFC home loan NOC.)
Home Loan Comparison Chart Of The Top Banks
|Bank Name||Rate Of Interest||Processing Fees||Tenure|
|ICICI Bank||6.90% p.a. – 8.05% p.a.||0.30% of the loan amount + applicable GST||Up-to 30 years|
|HDFC Ltd.||6.90% p.a. – 7.85% p.a.||Up-to 0.50% – up-to 1.50% of the loan amount + applicable GST||Up-to 30 years|
|Canara Bank||6.90% p.a. – 8.90% p.a.||Rs.10,000/- + applicable GST||Up-to 30 years|
|CLICK to get the complete chart|
Loanfasttrack is a Mumbai based loan provider company since 2015 offering loan services in Mumbai on– housing loan in Mumbai, mortgage loan in Mumbai, personal loan in Mumbai, business Loan in Mumbai, unsecured business loans,home loan transfer, top-up loans and loan transfers. Loanfasttrack is a direct sales associate with leading banks namely, ICICI Bank, HDFC Ltd, Canara Bank, Citi Bank, Piramal Housing Finance, etc.
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