Buying a house requires an endless amount of capital, especially when a person’s finances don’t allow for such substantial investments; which is why many borrowers approach banks/NBFCs to apply for home loan. Whether a housing loan scheme requires the borrower to prepay the home loan or repay it as per the tenure, it’s imperative to demand an essential document from the lender: the NOC.
The borrower requests a NOC during the closing of a home loan. Here is what a NOC is, and why it is an integral part of the home loan closure process.
What Is a NOC?
A NOC or a No Objection Certificate is a legal document received by the borrower from the lender when they repay their home loan amount in full. It is essentially a certification that substantiates that a lender is no more the legal owner of a home loan property. Simply put, an NOC is proof of transferring a property’s ownership from the lender to the borrower.
This document includes the home loan interest rates, principal, EMI obligation and the outstanding balance, combined with the borrower’s details – name, loan account number, loan closure information and the property address (the one for which an easy home loan is availed).
How and Where Do You Receive a NOC?
Usually, the borrower receives a NOC on the email address stated by them in their home loan application documents. And, they should receive this document right after the repayment.
Importance of NOC After Home Loan Closure
As mentioned above, a NOC hands the homeownership to the borrower. But, it has other hidden advantages as well. They include:
- Document recovery
The home loan application process puts forth many documentation responsibilities on the borrower. After searching for a lender – preferably one that offers the most affordable home loan interest rates in India, a borrower uses home loan calculators – such as a home loan EMI calculator to assess their monthly obligations. The chosen lender then demands various financial documents to determine the home loan eligibility of the borrower.
All these documents stay with the lender until the home loan is fully repaid. The NOC enables them to claim all the initial and intermittent documents from the lender during loan closure.
- Improvement of credit worthiness
Successfully repaying a loan increases a borrower’s credit or CIBIL score significantly. And, the NOC is proof of proper completion of a home loan. Once the lender releases the NOC, a borrower can submit it to CIBIL, which updates a borrower’s credit history automatically. This procedure is pragmatic if a person wishes to opt for another loan in the future.
Are you looking to take or close a housing loan soon? While the coronavirus pandemic prevails, it is better to avail or close a home loan online rather than walking into your lending institution. Not only will this keep you safe, but will also enable a more convenient and transparent transaction with your lender.