Home Loan Foreclosure Made Seamless
Have you ever wondered what a Home Loan foreclosure is? Every financial organization allows the borrower to repay the debt before the set period. The borrower simply needs to go through a streamlined process. Say a borrower manages to get a good amount of money saved up and he feels a strong sense of relief and pride in paying off the Home Loan, he can activate his option of a Home Loan foreclosure. This is considered to be one of the happiest moments in the borrower’s financial history. While understanding Home Loan foreclosure as an option, it is important to follow some important procedures.
Firstly, it is essential for you to have a clear knowledge of what the absolute outstanding amount to be repaid really is. For this purpose, a Home Loan foreclosure calculator makes your task easy. Check your outstanding Home Loan amount with this tool. The tool is easily available online. You simply need to enter your loan amount, actual tenure, the rate of interest as applicable, EMI start date etc. The software will do the calculation and give you the amount you need to shell out to pay off the loan.
Just paying the pending payment to the lender is not enough and does not finish your duty. Here are some details involved in the process to check off on your list of things to do:
- Know and pay the exact outstanding principal amount
- Do not rebuff to pay the additional Interest the lender demands
- Collect original documents
- Take back your security cheques
- Obtain closure statement and a No Objection Certificate (NOC)
How Home Loan Foreclosure Works in India
Earlier you could close your Home Loan by paying charges such as a two per cent fee on the outstanding balance of your loan at the instance of foreclosure and the amounts (if any) prepaid in the last year along with the applicable service tax charge. However, The Reserve Bank of Bank (RBI) has issued a notification to all banks in 2012 for not charging any foreclosure/prepayment penalties on Home Loans with floating interest rates. This is great news for Home Loan borrowers so that they can take advantage of better credit pricing in the competitive landscape of our banking industry.
Before the process of a foreclosure, it is imperative that the borrower clears out all outstanding dues remaining on the Home Loan as a mandatory step. The lender issues a letter (foreclosure statement) confirming the remaining amount that may be payable towards the Home Loan. Once all outstanding dues have been cleared by the borrower; the request is taken forward and the Home Loan is successfully closed out.