Home loans and any other types of loans are hard to repay and once it is repaid it feels like a huge burden is taken off our shoulders. The need to run around the banks and making payments are done for and we can concentrate on other matters from right then. So, whenever a borrower pays off his standing debt, there is a sense of peace that comes in naturally. It is one responsibility off the mind. Amongst this feeling of responsibility taken off the checklist, we almost forget about one of the important things. Getting a No Objection Certificate that the loan has been completely repaid is almost ignored without a worry. This is acquired from the lender and it will aid in the future while looking for taking more credits from any other bank or financial institution. Here, we can see why a NOC is a vital closure document after repaying a home loan:
What exactly is a NOC?
A No Objection Certificate is a No Due certificate that is acquired from the lender once the debt has been completely repaid. This certificate helps an individual later on if he/she wants to avail another financial credit in the future.
When an applicant applies for a new loan, the prospective lenders usually demand an NOC provided by the principal bank to ensure that he/she has no outstanding debts under their name. The certificate provides intricate details, including the closure of the loan by the right date and time. It is very important to close any type of loan with this certificate for availing credits without any hassle in the future.
How is a NOC acquired?
Every one of the borrowers is not really aware and don’t know the importance of getting any NOC. And even if some lenders send a NOC to the registered address after the loan amount has been completely repaid, some don’t. First of all, the borrower should be completely aware of this process and that it exists.
As a borrower, he/she should take responsibility and ask for the NOC after the closure of the loan. When applied, the NOC is usually sent as a mail to the registered address or one can get it from the bank or financial institution directly. If there is a change of address during the loan tenure, it should be notified to the banks so that they send the relevant documents to the current address and not the old one.
How is a NOC helpful?
If the applicant is getting a second home loan and if the bank does not sanction the loan, citing a low CIBIL score as the reason, he/she can show the NOC from the previous lender (of the first loan) to gain the trust of the lender. There might be problems and flaws in the credit score calculation and sometimes it is not updated by the agency even after the first loan is completely repaid with the interest amount. With a NOC, one can prevent the rejection of home loan application.
When Ms. Sakshi wanted to avail a second loan to purchase one of the apartments in Pallavaram, she submitted the NOC acquired from the previous loan lender to gain the trust of the current bank and she had a decent credit score to help her get the loan sanctioned.
The NOC can also help an applicant to apply for a new credit card without any hassle. It clears that the applicant has repaid all the debts in a periodical manner without any default payments and helps to gain the trust of the current credit lender.
There are instances where the monthly EMI for a loan is not recorded in the bank even when the borrower has paid due to technical glitches from the bank’s end. In this case, the borrower should demand an NOC that the delay was caused due to the bank’s flaw. Sometimes, the lender might not have kept track of the reason for this delay, while providing the credit history of the CIBIL agency.
These are few of the reasons that a NOC is vital for a borrower of any kind of loan and credit. The responsibility should be taken by the borrower for any credit/loan process to be smooth and without any trouble in the future.