Home loans can run for a long tenure and may extend up to 15 to 20 years. Home is regarded as one of the best investment options. However, not everyone wants to wait for the long tenure to repay loans, since they want to close the loan before the scheduled time.
Therefore, home loan pre-closure is the only option to close your long-term loan before the said duration by paying-off in part or in full. However, it is highly important that you inform the bank if you want to close the loan before its scheduled period. You will have to give it in writing to the bank.
It should be kept in mind that banks usually charge prepayment penalty for closing loan ahead of tenure. However, there are a few banks that do not levy this charge if you can furnish proof regarding the source that you have used for making the pre-payment. As proof of income source, you will have to produce ITR filing, salary slips and bank statements.
The procedure to pre-close LIC HFL home loan is:
- First, you will have to apply for a pre-closure certificate requesting LIC HFL.
- You will receive the certificate in few days, after which you will have to issue a cheque in favour of the banking institution LIC HFL. With this, you will have to give a request letter for pre-closure of the loan.
- In case of fixed rate home loan, a prepayment penalty will be charged, but in case of floating rate home loan, no prepayment penalty is charged.
- Once the payments are done towards the pre-closure of LIC HFL home loan, you will be given the original property documents. The best part of the procedure to pre-close LIC HFL home loan is that the documents can be received in just 15 days.
Usually, there are other procedures that need to be followed in case of home loan pre-closure, other than what you have seen in pre-closure of LIC HFL home loan.
First off, you should get back all original documents, scan them and keep them in a safe place. Make sure that all the pages in the original document should be as it is.
Second, you should obtain a No Objection Certificate (NOC). It is a clearance certificate, which clarifies that the bank no longer has obligations or interest with your property. It ensures that all documents are cleared by the bank after sorting out all doubts.
Just like the procedure to pre-close LIC HFL home loan, other banks have the similar rules. Third, is to remove all liens on your property and getting the same from the registration office. A lien is defined as a transaction which is registered in the Registrar Office that causes obstruction in selling the property. Walk to the registration office with a bank official and get the lien removed. You should know that without a lien removed, a home loan pre-closure is incomplete.
You should also get a legal clearance certificate from your lawyer. The legal clearance certificate that is obtained from the reputed lawyer. Though it is an optional attachment, this process will speed up your pre-closure procedure.
You should also have a detailed track of all loan repayments. Since this process is required to speed up your pre-closure procedure, you should start by tracking all bank statements that actually reflect your loan EMI. Also, keep a photocopy of a demand draft or cheque while paying lump sum prepayments.
Also, obtain an encumbrance certificate from the Registrar. It is a document maintaining all financial transactions that have been performed on the property.
Thus, the smooth procedure to pre-close LIC HFL home loan, as mentioned above, makes sure that even if you close repayment of home loan before time, there is no obligation left to it.