Loan: Huge relief, RBI has told bank to do this, announcement soon

Loan: Acquiring a home represents a significant financial commitment, typically facilitated through a home loan. This loan is repaid via monthly installments, known as EMIs; however, many individuals opt to eliminate their debt by settling the remaining balance prior to the completion of the loan term. This action is referred to as home loan foreclosure.

Home loan foreclosure

In this article, we will explore the concept of home loan foreclosure, its potential advantages, the procedure involved, and key considerations to keep in mind. Home loan foreclosure occurs when a borrower pays off the remaining balance of their home loan in a single payment, thereby not only saving on interest but also achieving debt freedom more quickly. After making a few EMIs, the borrower may initiate the foreclosure process. To determine the foreclosure amount, customers can either access their bank’s online portal or visit a branch in person for assistance. The bank will provide details regarding the total outstanding amount, which encompasses the amount already paid and any accrued interest.

If you intend to fully repay your home loan ahead of schedule,  follow the steps below:

Notify the bank – Initially, inform your bank or financial institution of your intention to foreclose the loan, enabling them to initiate the necessary procedures.

Obtain consent from co-borrowers – If the loan is co-signed with another individual, the presence of all co-borrowers will be necessary, as the bank may require their signatures.

Gather documentation – Bring along essential documents such as identification proof, a cheque book, and bank statements. The bank may also request three months’ worth of bank statements.

Calculate the total outstanding amount – The bank will provide you with the total outstanding balance, which may include the remaining principal, interest accrued to date, and any additional charges.

Acquire a No Objection Certificate (NOC) – After settling the entire loan amount, ensure you obtain a NOC from the bank, which will confirm that no outstanding balance remains.