What is NOC all about?
Once you pay off your home loan, you may presume that you are done and dusted. However, that is not the end of the process. There are still some more legal formalities left and one of the important formalities is getting the no objection certification (NOC).
The NOC for home loan must be obtained from the bank certifying that the bank does not have any claims on the home property. In addition, you are also required to get an NOC from builder for home loan saying that there are no dues to the builder. Once these NOCs are received, you can apply to the registrar of properties to strike off the lien.
Why NOC is an important document for home owners
Here are some reasons why the NOC is required for the home owner, once the loan is fully repaid.
- The NOC is the legal certificate from the statutory body that there is no lien that the bank has on the property and that you have a clean title to the property. Unless the NOC is obtained and the removal of the lien done at the registrar end, the property remains in the name of the bank for official records. It does not matter that you have fully repaid the home loan.
- Having an NOC means that the information gets sent to CIBIL to update your personal credit score. Once this is done, you don’t have to worry about the impact of the home loan and the lien on your credit score. Not only is the lien removed, but even the loan is officially treated as closed and it adds to your net assets. This will also help in getting loans in future.
- There is an interesting aspect about insurance that you need to know. If your property is damaged and there is a claim to be made to the insurer, then the claims is paid directly to the account of the client only if the NOC is available. In the absence of the NOC, the records will still show the property as hypothecated to the bank. In such cases, the insurance company pays the claim to the lender and not the customer. That is one important reason to ensure that NOC for home loan is obtained by you immediately. You must also ensure to get the NOC from builder for home loan so that the documents are clean and show against your name.
Getting an NOC from the bank and removing the bank lien in the records of the registrar has its own advantages. It not only improves your credit standing, but also gives you unfettered rights to the use of property, taking mortgage loans against the property or claiming insurance for damages.
Process flow for getting the NOC
Here are the 4 steps to get the NOC letter delivered to your residential address.
- Once your last EMI is completed, you must immediately reach out to your lender and make a formal application for a no-dues certificate and a no objection certificate (NOC). Most banks have a standard format for the same.
- Normally, banks will take a few days to verify the information and check if there are any dues against your name; either as interest, EMI portion, penalty charges, legal charges etc. Once the bank is clear, they will go ahead and issue the NOC.
- Once this verification is completed and the bank is satisfied, the NOC application is processed and the lender immediately sends the NOC via post to the registered address of the borrower.
- Normally, banks will deliver you the NOC letter in 1-2 weeks, if all the formalities are completed and there are no dues or disputes. Some banks also allow you to download a copy of the NOC online with digital signature authentication.
The entire process should be completed in less than a month after the home loan is closed.
Don’t panic in case you misplaced or lost the NOC
In case you collected the NOC and either lost or misplaced, file a first information report (FIR) with the nearest police station. You can reapply to your bank with the details of the loan and an acknowledged copy of the FIR filed. Banks normally charge an administrative fee for issuing a duplicate NOC. However, it takes time and may require regular follow-ups with the banks.
To sum up, obtaining an NOC is not only essential, but also helps you get the property officially in your name. The NOC for home loan from the bank and the NOC from builder for home loan are not just mandatory documents but key to your unfettered ownership of the property. It also brushes up your credit score.