What To Do After Your Home Loan Is Repaid?

The day when he pays the last of his EMI (equated monthly installment) is like passing a milestone in a home loan borrower’s life.  After this momentous event, certain minor duties must be performed by the borrower in order to put things in perspective.  Let us understand the process step by-step.

The bank job

Make an appearance: Ideally, the bank should get in touch days after you have paid the last of your EMI, the bank is liable to close your loan account, and send you a mail or make a phone call to the borrower informing them about it. Unfortunately, most banks in India, especially the public sector ones, don’t extend that courtesy.

In case they do not, you should visit your branch and take up the matter with the relevant official, ask them to close the loan account and release every important piece of paper that shows you are its owner that is currently in the custody of the bank.

Get your papers: We are assuming that you have kept a list of property documents and some other material that are with the bank. These may include sale deed, mother deed, post-dated cancelled cheques, etc. Additionally, the bank would also issue you a no-encumbrance certificate, an official statement saying you have paid the loan in full and.  

In cases where homebuyer purchases the property from a developer, certain property documents may be in possession of the latter. They should claim them after the loan repayment.

Do note that the bank would makes you sign an undertaking, an acknowledgment that you have received all the documents. At that point, make sure no papers are missing. Once the undertaking is signed the bank is not liable to entertain any queries regarding missing documents.

Check on insurance: In case your home insurance and home loan insurance – the two are entirely different things is taken from another bank, you will have to go to that bank and show these papers to prove you are now the sole owner of the property and that the prime lender no more has any interest in it. Doing this is important because in case the need to claim insurance does arise, the insurer might send part of the amount to the prime lender in case it is not informed about the loan closure. Things are much simpler if the insurance products are also bought from the same bank.

Visit the registrar’s office: After the closure of your loan account, it would be appropriate to visit the sub-registrar’s office and make sure the latest details pertaining to your property are mentioned in public records. Someone from the bank may also have to visit the office with you to complete this formality.

Check your CIBIL report: You CIBIL report would clearly mention it when you are done paying your home loan. Go to any of those online platforms where you can download free CIBIL report to check if information is updated there. If it does not show the update in some months, visit the bank and ask them to correct it.

The other job

Focus towards saving/paying debts: Home loans teach us financial discipline. Most of us would like to be let loose for a while after the job is done. This may be a bad idea on so many levels. Once you stumble from the path of monetary prudence, you might find making a comeback extremely difficult. Also, considering a large part of your adult life has been spent in repaying your home loan, you may not have been in a position to safe enough for retirement. Since you might be approaching an age from where retirement age does not look very far, it is of utmost importance to make time and save enough to breeze through after-work life. In that direction, an amount similar to your monthly must be channeled towards an investment that fetches your considerable interest.

The excess money could also be used to pay all other outstanding liabilities—ideally, you should retire debt-free.