Congratulations! You've successfully closed your Loan Against Property (LAP). Now, it's crucial to ensure the mortgage on your property is officially removed, clearing your title and restoring your complete ownership. This process, while sometimes perceived as complex, is quite straightforward when followed correctly. This guide from GoodLyf will walk you through each step, ensuring a smooth and hassle-free experience. Remember to explore Loan Against Property options with GoodLyf for your future financial needs.
When you take out a Loan Against Property (LAP), your property acts as collateral for the loan. This means the lender has a lien or charge on your property until the loan is fully repaid. Once you close the loan, the lender must release this charge, officially removing the mortgage. Failure to do so can create issues when you want to sell, transfer, or avail of another loan against the same property. Removing the mortgage ensures a clear and marketable title for your property.
Follow these steps carefully to ensure a smooth mortgage release:
After you make the final loan payment, the first and foremost step is to obtain a No Dues Certificate (NDC) from your lender. This document confirms that you have repaid the loan in full and no further dues are pending. The NDC typically includes details such as your loan account number, property details, date of loan closure, and a statement confirming that the loan has been closed. Treat this document as gold and keep it safe!
Example: Imagine you took a LAP of ₹50 Lakhs against your commercial property. Once you pay off the last EMI, the bank will issue an NDC stating the loan account is closed with zero outstanding.
The Mortgage Discharge Certificate, also known as a Release Deed or Satisfaction of Mortgage, is the crucial document that officially releases the mortgage on your property. The lender prepares this certificate, which states that the charge on the property is being removed. This certificate should include details such as the loan account number, property details, the date the mortgage was created, and the date the mortgage is being released.
The bank might call you to their branch to collect it. Make sure that all the details are correctly filled. In case of any errors, immediately bring it to the bank's notice and ask for a corrected certificate.
When you took out the LAP, you would have submitted original property documents to the lender. After the loan closure, the lender is obligated to return these documents to you. Verify that you receive all the original documents, including the sale deed, registration papers, and any other documents related to your property. Maintain a record of all documents received.
Example: Ensure you receive the original sale deed, property tax receipts, and any previous loan agreements you submitted.
This is a critical step in the process. The Mortgage Discharge Certificate needs to be registered at the Sub-Registrar's Office where the original mortgage was registered. This registration formally removes the charge on your property in government records. The process involves submitting the Discharge Certificate, original property documents, your identity proof, and paying the required registration fees. The Sub-Registrar will then record the release of the mortgage.
Important Note: This registration is mandatory. Without it, the bank may have released the property from their books, but the Government records will still show the lien.
After registering the Mortgage Discharge Certificate, apply for an Encumbrance Certificate (EC) from the Sub-Registrar's Office. This certificate provides a record of all registered transactions related to your property over a specified period. The EC will show that the mortgage has been removed and that your property has a clear title. This step confirms that the entire process has been completed successfully.
You can apply for an Encumbrance Certificate online through the respective state government websites or physically visit the Sub-Registrar's office.
Maintain copies of all documents related to the LAP closure and mortgage removal, including the NDC, Mortgage Discharge Certificate, original property documents, registration receipt, and the Encumbrance Certificate. These documents will serve as proof that the mortgage has been officially removed and can be useful in the future for any property-related transactions.
Here’s a quick checklist of documents needed:
| Document | Description | | --------------------------------- | ----------------------------------------------- | | No Dues Certificate (NDC) | Proof of loan closure from the lender. | | Mortgage Discharge Certificate | Document releasing the mortgage. | | Original Property Documents | Sale deed, registration papers, etc. | | Identification Proof (Aadhar, PAN) | Required for registration purposes. | | Application for Encumbrance Certificate | Needed to obtain the EC and verify mortgage removal. |
The Reserve Bank of India (RBI) plays a crucial role in regulating lending practices and ensuring transparency in financial transactions. While they don't directly handle mortgage release procedures, their guidelines mandate lenders to provide necessary documents promptly after loan closure. Familiarize yourself with RBI guidelines regarding fair lending practices.
Removing the mortgage after LAP closure is an essential step to safeguard your property rights. By following this step-by-step guide, you can ensure a smooth and hassle-free process. Remember to keep all documents safe and seek professional assistance if needed. GoodLyf is committed to providing you with the information and resources you need to navigate the world of loans and finances. Looking for another LAP? Check out GoodLyf's LAP product today!