What is a NOC Letter and Why Do You Need It

What is a NOC Certificate?

A NOC (No Objection Certificate) letter is a legal document that serves as evidence of the customer having no pending Home Loan dues to be paid. It is issued by your lender, marking the closure of the loan repayment, typically at the end of your repayment tenor. It is also known as a ‘No Dues Certificate'.

Your Home Loan, even after you repay the full amount, will be considered active if you fail to collect your Home Loan NOC. Borrowers who ignore the closure formalities can adversely affect their credit profiles. The collection of the Housing Loan NOC is a crucial step of the loan closure process.

Read Also: Know All about the Home Loan Foreclosure Procedure 

A customer receives possession of their No Objection Certificate (NOC) letter only when the EMIs, extra charges, and late-payment penalties (if any), have been paid off entirely.Another noteworthy fact about the NOC letters is that, upon collecting them, the rights of the collateral used for the loan application process revert to the customer.

Why Do You Need a NOC Letter?

Having your NOC Letter is imperative to prove your Home Loan closure. Here are all the reasons why you must possess it after you’ve repaid your Home Loan in full.

• A NOC letter acts as proof, backed by law, of completing the payment of all outstanding fees. With a Home Loan NOC, you regain possession of your property (collateral). Your lender will only record your loan repayment as ‘complete’ with the collection of your Home Loan NOC letter.
• When you collect your Home Loan NOC, you are projecting yourself as an individual who can keep up with the debt commitments – raising your credit score significantly. Failure to collect your NOC letter reduces your chances of securing other loans with flexible payment plans.
• Steer clear of legal entanglements by collecting your NOC in case there is ever a situation where your Home Loan repayment competition comes under the scanner.
• While applying for a Home Loan, you must, per requirements, submit some financial documents to the lender. The original copies of these documents stay in the lender's care for the duration of the loan. To retrieve your documents after loan repayment, you will need your NOC letter. 

Also Read: Importance of NOC Letter after Paying off Your Home Loan 

Advantages of a NOC Letter?

​Once you repay your Home Loan, the NOC Letter pronounces you as the legal owner of the property. It legally states that you owe nothing to your lender. It contains the loan account number and the loan closure date. With this document, you can assert total ownership of your property and even proceed to sell the property if you wish. Having an NOC comes with multiple benefits. To quickly summarise, here are some of the advantages of a NOC letter:

1. You become the full owner of your property – You now have a proof that your property is in your name and is no longer a collateral with the bank.
2. You clear yourself of any dues you owe to the lender - An NOC assists in the removal of a lien on your property. A lien on your property means lenders still have a claim on it and possess the right to sell it off.
3. You can now borrow a new loan - Clearing off your dues will boost your credit score and place you in a position to get another loan at better terms.
4. You can sell off your property – Buyers ask for the bank NOC document while buying a resale property in order to confirm that the property is not owned by the lender.
5. You can claim insurance – In case of damage to the property, the insurance firm will make payments of the claim to you instead of the lender.

Also Read: Importance of a Home Loan NOC

What Should You Do If You Lose Your NOC Document?

If you lose your lender’s No Objection Certificate(NOC) letter, the first step you should do is lodge a police FIR. Next, you can approach your lender, in our case - Bajaj Housing Finance, and request for a duplicate NOC by submitting a copy of the FIR you had lodged with the police. Once you do obtain a duplicate NOC, you should check for any errors or discrepancies you may encounter.

How to Apply for an NOC Certificate?

Whenever a loan is closed, the system will trigger a digital copy of the NOC certificate automatically to the customer and send it to their registered email ID. If by any reason, the customer does not receive the NOC on their email ID, they can do either of the following. 

The customer can download their NOC certificate directly from the Customer Portal or they can request for the NOC certificate by sending a mail to bhflwecare@bajajfinserv.in 

Conclusion

​To sum it up, it is important to obtain a Home Loan NOC letter, especially since it will remove the hypothecation of the lender from your property, improve your credit score, and make you the rightful claimant in case you claim an insurance due to any mishap. If you delay obtaining the letter, it may further lead to complications.