When you take a home loan, closing it on time and getting debt-free is very important. Soon after you have repaid the home loan, seeking a No Objection Certificate (NOC) for home loan closure is the last important step to take. This document helps to prove that you are free from debt.

In this blog, we tell you all about what a No Objection Certificate (NOC) in a home loan is and why getting this letter is necessary.

What is Home Loan NOC?

A No Objection Certificate (NOC) is a legal document issued by a lender to a customer stating that the borrower has repaid the home loan entirely. NOC is also referred to as a “No Dues Certificate” and it can be attained when there are no outstanding dues. It indicates that the lender no longer has any rights to your property.

Home Loan NOC Importance

We share with you the reasons why it is imperative that you get a NOC for a home loan:

Removes Lien of Lender

A lien is an official claim of a person on another person’s property who owes them money. Obtaining a NOC for a home loan will help you eliminate the lien from your property and prove that the lender has transferred the rights to you. To put it simply, the lender cannot claim dues when you have the NOC. In any case, if the lender takes a legal step against you for unpaid dues, the NOC can be used as proof to show that you have repaid the loan entirely.

Improves Financial Health

Your home loan NOC contributes towards building a good credit score. Once the NOC is provided to the customer, the lender updates its CIBIL database, which influences their credit score significantly. Any individual with a credit score above 750 is considered reliable and is likely to be granted loans easily in the near future. If you do not apply for the No Objection Certificate (NOC) for home loan closure, your credit score is likely to get affected and you might face issues with loan approvals in the future.

Helps Get Insurance Claims

If you have the NOC for a home loan, you will be able to claim insurance, should there be a destruction of your property. In this scenario, the property owner, also the policyholder, gets the payment from the insurer and not the lender.

Avoids Legal Action

Once you have cleared all your dues and obtained the NOC for a home loan, you are protected against any false allegations by the lender. The NOC document serves as proof that your loan is repaid in full and helps improve your credit score.

Procedure to Obtain Home Credit Loan NOC

Mentioned below are some of the steps that need to be followed to attain the No Objection Certificate (NOC) for home loan closure:

1. Upon completion of your loan dues, you need to submit a letter of request to your lender, seeking all your original documents, NOC, and invoice copies. The lender will return the documents and issue the NOC within a few working days.

2. If you had applied for a loan with an NBFC, just log into your online customer portal, check your loan status, select NOC, and download the document. You may even have it emailed to your registered address.

3. The process remains the same even if you have applied for a loan on an unregistered property. But if the property is registered, a representative from the financial institution will accompany you to the Registrar’s office to have the lien eliminated and obtain the NOC.

What Should You Do if the NOC is Misplaced?

Check the following steps if your home loan NOC is misplaced:

1. If you had attained an NOC for a home loan document in the past but have lost it now, you will be required to reapply for the same.

2. File an FIR stating the loss of the document.

3. The next step is to submit the FIR and loan details to the lender, following which a duplicate NOC will be issued.

4. After receiving the NOC, ensure the certificate includes all the details. Verify if the NOC has a validity period, based on which you may need to request the lender to reissue the NOC.

The Bottom Line

The No Objection Certificate (NOC) in case of a home loan is an important document. Hence, right after the loan repayment is over, you should immediately seek NOC from the bank. Submit all the necessary documents and complete the formalities so you can acquire the NOC without delay. After all, this is one document that will come in handy even at the time of applying for a new loan anytime in the future.

Top NBFCs like DMI Housing Finance are helping their customers understand the significance of a home loan NOC and the right way to attain this document. If you want to source more details or apply for a home construction, renovation, or extension loan, get in touch with the customer support team.