Importance of an NOC on Completion of Your Home Loan Repayment

You have closed your Home Loan with your bank. You need to collect the original title deeds and other documents relating to the property from the banker and keep it in your custody. Along with all these documents, there is one more document you need to obtain. We are referring to the No Objection Certificate (NOC) from the bank. You can also refer to it as the No Dues Certificate. It is an important document because it absolves all the rights of the lender over the collateral.

What should the NOC comprise of?

The NOC should explicitly state that the bank does not have any objection in releasing the original title deeds of the property as the borrower has repaid the loan in full and closed the account. It should also contain exhaustive details of the property (nature of the property, complete address, area, survey numbers, Sub-Registrar jurisdiction, and so on). It should also mention the loan account number, the start date, and the closing date of the loan.

Will the NOC suffice to extinguish the bank’s charge over the property?

No, the NOC is a supplementary document to the “Cancellation of MOD.” The bank must submit the copy of the NOC to the Sub-Registrar’s office while executing the “Cancellation of MOD.” It is necessary to get the equitable mortgage cancelled by the Sub-Registrar and transfer the interest in the property from the bank to the original owner of the property.

Advantages of obtaining the NOC

• Cancel the Equitable Mortgage – The NOC is essential to cancel the equitable mortgage created by you in the bank’s favor.

Improves your credit score–Once you close any loan, the bank has to report the fact to the credit bureaus. In case they omit to do so, you have to take up the matter with them and update the records. The NOC is the most crucial document in your possession to establish the closure of the Home Loan. It will result in the updating of records at their end and improve your credit score.

Helps you get another loan – The NOC is proof of closure of the Home Loan. It makes you eligible to Apply for a Loan Against Property or submit the title deeds as collateral for some other loan.

Enables you to sell the property – The property should not have any encumbrances when you wish to sell it. The NOC along with the Cancellation of MOD ensures that there are no encumbrances on the property. The prospective buyer can ascertain this fact by applying for the Encumbrance Certificate.

Receive insurance claims, if any–The NOC ensures that the bank does not have any charge over the property. Therefore, you can receive insurance claims in case of destruction of property. The NOC helps to cancel the assignment in the bank’s favor. Thus, the insurance company will make the payment of the claim, if any, to you rather than to the lender.

What do you do in case you misplace the NOC?

It is a very important document so you must keep it very safe. You should keep it along with the original title deeds of the property. However, if you still lose it or lose it to an unfortunate event like a fire, you should do the following.

• Lodge the complaint with the local police station and obtain the copy of the FIR.

Approach your lender with the copy of the FIR and apply for fresh NOC giving details of the loan transaction.

It will take some time for the bank to issue the NOC because they need to search in the Sub-Registrar’s Office.

• The bank has its panel advocate to do the job.
• On receipt of the legal search report, the bank proceeds to issue a duplicate NOC.

The bank can mention the words ‘Duplicate NOC instead of the original reported lost by the owner of the property’ while issuing the NOC.

What will happen if you do not obtain the NOC?

The sub-Registrar will not register the “Cancellation of MOD” document in the absence of the NOC. As a result, the bank’s charge will be present on the property making it impossible for you to transfer the interest in the property or sell it.

The NOC is a crucial document. Once the Home Loan repayment is over, you should not waste time in getting an NOC from the bank. You have to complete these formalities within the specified time. Delay on your part can cause unnecessary issues to crop up at a later date.