In India, getting a home loan is easy. You can visit the branch of a lender, fill the application form, attach documents, and apply for the loan. Alternatively, you can apply online or through a mobile app. Usually, you receive the funds in your bank account within twenty-four hours of loan approval. From the next month onwards, you start repaying the loan and pay it until the end of the loan term; unless you opt for foreclosure.
But, is that everything you need to know about a home or housing loan?
Probably no! While you will get ready-made information about the housing loan application process and interest rates, very few lenders explain the importance of a No Objection Certificate or NOC.
What is No Objection Certificate and Why Do You Need It?
The No Objection Certificate, popularly known as the NOC, is a letter that your lender issues after you clear off all your housing loan dues. The document is legal and includes the following details:
- Name of the borrower
- Housing Loan Account Number
- Address of the mortgaged property
- Date of closure of the housing loan account
- Date of the issuance of letter
- Any other detail about your loan account
Generally, your lender sends you the housing loan NOC letter after you pay off all dues. However, sometimes, you might not receive the letter due to reasons like a change in address, non-updation of records, etc. In such cases, it is wise to request the lender to issue the NOC certificate in duplicate.
The housing loan NOC letter can help you in the following ways:
The Property Returns to its Rightful Owner
When you avail of a housing loan with an attractive interest rate, the lender provides you with the money against your property papers. So, while you continue with the construction of the house or live in it, the property rights legally remain with the lender. A NOC letter enables you to claim ownership of the property and use it to avail loans, like a loan against property.
You Get a Boost in Your Credit Score
Barring a few reputed lenders like PNB Housing, most Indian lenders reject housing loan applications from borrowers with a credit score below 750. The credit score factors in your loan repayment history and financial stability to compute the score. Sometimes, when your lender fails to inform the credit bureau about your loan closure, your credit score remains low. The NOC letter ensures that you can file a complaint with the credit bureau when your credit score drops below the level it should be.
Makes Selling More Convenient
If you are a real estate investor who availed a housing loan to invest in a property, you need a NOC to sell the property and make a profit. According to Indian laws, no mortgaged property can be legally transferred or sold to another buyer without a NOC from the lender. Hence, both selling and transferring the property to another person can become easier when you have a NOC.
The process of getting a NOC from an Indian lender is fairly straightforward. Some reputed lenders offer the facility to download the NOC from their web portal after you clear off the loan dues. However, in case your lender does not offer such a facility, you can request them to send the letter to your registered address. With interest rates at attractive levels, now is perhaps the best time to get a new home with a housing loan.