What is NOC in Home Loan and Why is it Important?

Owning a home is a precious dream we all nurture. A house is a great investment that gives us a sense of financial security and a permanent roof over our head. But buying a house in today’s financial climate isn’t easy. Most people have to depend on home loans to fulfil this dream. The loan should be repaid in monthly instalments within the stipulated tenure chosen by you. Once the home loan is repaid you need to ask your lender to handover the NOC for home loan document. Here’s what it is and why it is important.

So what exactly is NOC?

Short for No Objection Certificate, NOC is a legal document which your lender issues to you, once you have repaid your home loan in full. You need to repay the principal amount loaned by your lender along with the interest levied on it to get hold of this certificate. There should not be any outstanding or pending dues on your part. The NOC for home loan document contains important information including your name, and address of the property loaned, of which the lender is no longer, the legal owner.

Features of NOC document

Having repaid the loan dues, the NOC names you as the legal owner of the property. It also features the loan account number and the date on which the loan was closed i.e. last EMI instalment date. Through this document the lender forfeits their legal right or claim over the property, transferring the property rights to your name. As such, the property seizes to serve as collateral with the lender and you are free to sell it, if you wish to.

Why is the NOC important and why do I need to apply for it?

Home loan NOC importance is best explained through the following reasons:

1. 1. You get hold of the legal documents of the property/properties you own

   When you apply for a home loan, you are required to submit several important financial documents to your lender. These documents remain in your lender’s custody throughout the tenure of the loan. You can get your hands on those crucial documents only after you’ve repaid the home loan in full. Sometimes, you may need to take a top-up loan as well to repay the home loan, and the lender may ask for more collateral such as gold, life insurance policy etc. The NOC for home loan document helps you get back all the collateral paid against the various home loans.

2. 2. It helps improve your Credit Scores

   Irrespective of the type of loan you apply for, you are expected to provide your credit scores to be eligible for loans. Your credit score is affected if you have an ongoing loan, especially if you default on EMI payment. Once the loan is paid off, you can update your CIBIL record stating that you do not have any outstanding loans. In case you ignore asking the lender for the NOC for home loan document, you CIBIL score will not be updated, making it difficult for you to be eligible for another loan, if you need one.

3. 3. It allows future lenders a sneak peek into your financial health

   You may need to apply for some other loans in future, for instance, an education loan to sponsor your children’s higher education. Now, if the value of the education loan is high, the lender may ask you to provide collateral. The home you own can serve as collateral. In case you do not have the NOC for home loan document, stating that you are the legal owner of your home, the education loan may be rejected, as the lender may think that you still have an ongoing, high-value loan to repay. This makes you an unworthy candidate and even affects your credit score when the loan is rejected.

How is the NOC transferred?

Having explained home loan NOC importance, let’s understand the NOC transference procedure.

1. 1. You need to reach out to your lender and apply for the NOC transference by filing a simple form
2. 2. The lender accepts your application and reviews the status of your loan
3. 3. The lender mails the NOC to the address listed in your home loan application/NOC form (if you’ve moved to another address).

In case you do not receive the NOC within a month, you should check with your lender about the NOC status.