Obtain an No Objection Certificate (NOC) as soon as you fully pay off your home loan
An NOC helps –
- remove lien from your property
- improve your credit score
- get another loan
- sell your property
- get insurance claims, if any
A No Objection Certificate (NOC) is a legal document issued by a housing finance company or bank to a customer declaring that he/she has no outstanding dues towards the lender. Sometimes referred to as a “No Dues Certificate”, an NOC can be obtained from the lender once the loan has been paid off completely. Also, an NOC absolves all rights of the lender over the collateral.
NOC impacts your credit score
However, owing to ignorance, often many of us do not bother to get the NOC after completely paying off an outstanding loan. With CIBIL in place, few realize that for a new future loan, their credit score will invariably be consulted. And if the closure of a past loan has not been updated on CIBIL (due to failure of your past lender to submit the information to CIBIL) it will lead to a sub-par credit score. Then, only an NOC comes to one’s rescue as it is the very document that can establish that the past loan was indeed repaid.
Receiving your NOC
Although all lenders are supposed to send the NOC to the customer through registered post after the loan has been paid off, one may still fail to get it because of delayed dispatch and change of address etc.
Not having this simple document can lead to myriad complex problems. For example, in case of a housing loan, it is important to obtain the NOC bearing the relevant details of the property. It should bear the address of the house, name of the customer and the loan account number. If you have taken a housing loan and your property is registered, then the NOC copy needs to be submitted to the registrar of properties to get the lien of hypothecation struck off, failing which, the lender continues to be the owner of the house and one cannot sell it if one desires. Further, in case of any accidental damages and subsequent insurance claim, the payment will be made to the lender and not to you. However, in case of non-registered properties, the lender will merely return the title deeds.
Misplacing your NOC
What if you took an NOC in the past but lost it later and need it now? First, an FIR is normally required to be lodged about the loss of the NOC. Then a request to the lender needs to be made with a copy of FIR and all the loan details. But getting a duplicate NOC may take time and effort to follow-up.
Many lenders have made available the format of NOC on their websites. Make sure that the certificate carries the details of the property along with the loan details. The words “no objection” also need to find a suitable mention. One more important thing to remember is that some lenders’ NOCs have a limited period validity. Just check if yours does and see how it affects you, especially in case of a loan against a registered housing property; if you have delayed getting the lien struck off at the Registrar of Properties, you may need the lender to re-issue the NOC to do so.
Also Read - Home Loan Agreement - Important Clauses