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How Home Loan Foreclosure Work

  • Ram Patel had taken out a Home Loan in Calicut for Rs. 30 lakh three years before. He had been consistently paying up the EMIs on time, and he was happy that he and his family were able to live in their own home.

     

    2 months back, Ram’s ancestral property in Calicut was sold by his parents and fetched them around Rs.90 lakh. The amount was equally divided and distributed among Ram and his sister, Aarti. As a result, Ram got Rs.45 lakh.

     

    Now, when he got such a big amount, he made up his mind to pay off his existing Home Loan fully with the help of the Home Loan foreclosure. However, he did not have much idea as to how to go about it.

     

    In the same context, let’s help you know the Home Loan foreclosure procedure.

     

    Every bank or a financial organization allows their borrower to repay the Home Loan or any other loans before a set period. The borrower needs to follow a process to get the foreclosure done.

     

    A foreclosure could be stated as one of the happiest occasion in the financial history. Why? What else you want than to see that your Home Loan in Calicut or any other location is paid off quickly and you don’t have any obligations.

     

     

    The feeling is entirely different, and one needs to be in the shoes of an actual person to know how it feels.


    Home Loan Foreclosure Procedure

     

    <> What percentage of your monthly income consists of your EMI?


    The total percentage that you have allocated towards your Home Loan in Calicut EMI should not be more than 40% of your total income. If you see that you are paying more than 40% as EMIs for your Home Loan, it is always advisable to opt for a Home Loan foreclosure if you have saved enough or got some unexpected cash just like Ram. Before you begin to foreclose your Home Loan, make sure to consult your lender and a known financial planner so that you could avoid all the cons.

     

    <> You may lose the tax benefit


    Before you opt for a Home Loan foreclosure, make sure to evaluate the impact of letting go some fixed tax benefits as well.

     

    <> Removing the burden of a Home Loan as soon as possible?


    Generally, you should not foreclose your Home Loan account if it is only six months old. Why? Doing this may incur a loss for you as a higher processing fee may be levied by your lender. But, even a very late repayment of the Home Loan principal should also be not your agenda.

     

    <> Steps involved in the Home Loan foreclosure


    Always know that just paying off the lender with the remaining Home Loan principal amount is not enough and it does not end your duty. Here are some processes details that you would like to know to stay better prepared:

     

    - Firstly you should know what your current Home Loan outstanding amount is. Make sure that you have an idea of the exact figure and then only pay it accordingly

     

    - Make use of the Home Loan foreclosure calculator to know more details

     

    - Do not deny to pay some extra or additional interest charges which a lender may demand (it depends on a lender if they ask for it or not)

     

    - Be sure to collect the entire set of original documents

     

    - Ask your lender to provide you the security cheques, if any

     

    - Make it a must to acquire closure statement and a No Objection Certificate (NOC)

     

    The Bottom Line


    Although a Home Loan foreclosure is a great step to make yourself free from all current and debts, you should consult your lender and know the entire procedure step by step.

    Why? It’s because different lenders may have different conditions and you will need to abide by the terms and conditions.

     

    Get in touch with your Home Loan in Calicut service provider today to get started!


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