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LIC Housing Finance Limited (LIC HFL) has its registered and corporate office at Mumbai. It is an Indian housing finance company with 181 marketing units, 13 back offices, and 7 regional offices across India. It was formed in the year 1989 under Life Insurance Corporation of India (LIC) with representation in Dubai and Kuwait apart from India. The National Housing Bank (NHB) monitors it and LIC HFL itself is listed on NSE and BSE. It offers home loans for construction, repair, the extension of houses, and purchase of property for the residential and non-residential purpose.
LIC Housing Finance Home Loan Details
LIC HFL has a variety of housing loan options for customers and it is available for resident Indians, non-resident Indians (NRIs), and pensioners (postretirement and pre-retirement). The interest rate is between 8.50% and 8.70%. No guarantor is required, except in the case of pensioners.
LIC Home Loans for Resident Indians
This type of housing loan is for purchasing a new residential unit/house, construction of a new residential unit or house and extension to an existing residential unit or house.
Home Loan for Purchase, Extension and Construction:
- Loan for purchase and construction of new apartment, house or residential unit, and amount minimum offered is Rs. 1, 00,000. The same condition holds true for extension of existing house such as adding a room to the house.
- Maximum loan tenure is 20 years for self-employed and 30 years for salaried applicants.
- Repayment is through EMI (monthly instalments).
- Funding made available depends on the loan amount. For example, loan up to Rs. 20 lakhs, 85% on property’s total cost (with stamp duty and registration charges), a loan amount of more than Rs. 20 lakhs but up to Rs. 75 lakhs, 80% of the above said inclusive, and loan of more than Rs. 75 lakhs, 75% of the property cost is provided.
LIC Home Loans for Non-Resident Indians (NRIs)
NRI customers can take a home loan for construction and purchase of a new house and extension of an existing house.
Home Loan for Purchase, Construction and Extension:
- The loan is available for purchase and cost of construction of new house, residential unit and apartment. The applicant can borrow a minimum of Rs. 1, 00,000.
- The same amount of loan is provided to NRIs who have an existing house in India and want to make an extension to it. Thus, the finance covers the cost of the extension.
- Loan provided depends on the loan amount. For example, loan up to Rs. 20 lakhs, 85% on property’s total cost (with stamp duty and registration charges), a loan amount of more than Rs. 20 lakhs but up to Rs. 75 lakhs, 80% of the above said inclusive, and loan of more than Rs. 75 lakhs, 75% of the property cost is provided.
- The repayment is done through equated monthly instalments.
- NRIs with professional qualification can get loan tenure facility of maximum 15 years and other NRIs can get the loan tenure up to 10 years.
LIC Home Loans for Pensioners
The home loan by LIC also exists for individuals who have attained retirement age or are approaching the same. It has easy terms, low- interest rates, simple repayments, and comfortable tenures. This loan is available for people who are 50 years of age or above and have a pension scheme after retirement, while funding is enabled for pensioners after retirement, who draw a pension from stable income source.
The terms and conditions for home loan to pensioners (before retirement) are that that the borrower must submit a Letter of Undertaking that the entire loan or 30% of it (as decided by the area office) is to be repaid out of their retirement benefits, thus the home loan balance amount must come from pension income.
Home Loan before and after Retirement
Under this scheme, the borrower cannot commutate his/her pension or any part of the pension. A guarantor is required who is approved by the provider.
- Individual applicants can take this loan for construction and purchase a new flat or house, which can be utilized for extension and building an existing residential unit and house.
- For those before retirement, the term of the loan is up to 15 years or until the borrower reaches 70 years of age, whichever takes place the first.
- For those after retirement, the loan should be repaid until borrower reaches 70 years of age.
Documentation Required for LIC HFL Home Loans
- Basic Documents: Passport sized photographs, bank statements of the last 6 months, cheque with processing fee amount, duly filled and signed application form.
- Salaried Applicants: Form 16 or income tax returns, salary slips of the last 3 months.
- Self-employed Applicants: Proof of business, educational qualification certificates, income tax returns for last three years with income computation, balance sheet, profit and loss account for last three years audited or certified by a chartered accountant.
How Does the Borrower Close LIC Home Loan through Creditseva?
The housing loan when settled or close will release off the borrower from home loan, debt, and its dues. The same also means that the concerned property is under control of the borrower completely and the bank does not hold it as mortgage collateral anymore.
Closing a home loan is a crucial process and must be done carefully. Creditseva is here to help borrowers with simple steps for LIC home loan closure. To start with, sign up or sign into Creditseva user account and follow the guidelines mentioned by our financial experts.
1. Closure through prepayment of Loan
2. Closure through completion of loan tenure
3. Closure on account of bad loan
4. Closure through settlement of loan.
LIC Home Loan Closure by Prepayment
Home loan prepayment is a valid method to close home loan. Here are ways to prepay LIC home loan quickly.
Step 1: Personal visit
- To close home loan, one must visit the LIC HLF branch nearest to him/her.
- Not necessary that the borrower must visit the same bank branch, from where loan was provided.
- It is advisable to visit bank on weekday, as loan branches of LIC HFL may not process prepayments on weekends.
Step 2: Reach representative
- On reaching the bank, speak with its representative and check for any mandatory requirement and formalities that have to be done.
- The procedure is time consuming and requires a proper discussion with the bank representative.
Step 3: Disclosure form
- The disclosure form is handed to borrower by bank representation.
- In it, one has to state all sources of income through prepayment partially or completely.
- Exact amount is not disclosed but the approximate amount is detailed.
Step 4: Cheque for prepayment
- The borrower has to calculate the prepayment loan amount.
- Hand a cheque of this said amount to LIC Housing Finance Limited.
Step 5: Receipt of prepayment
- A prepayment receipt is given to borrower.
- It means that the housing loan is now paid off in full.
Step 6: Amortization sheet
- Borrowers can request for the amortization sheet. It has details of EMIs paid until date.
- The bank can sent it via email to customer on request.
- The sheet can be downloaded from the official website through housing loan login portal.
Step 7: Collection of property deed
- In 10 to 15 days, the property deed file is couriered to LIC HFL by the registrar. The process takes place when the prepayment completes.
- The borrowers should collect the property deed themselves, as bank retains no responsibility for the damages to the files during courier.
LIC HFL Loan Closure by Loan Tenure Completion
On repaying the home loan by paying the last of the EMIs, one can close the housing loan.
- Visit the branch of LIC HFL that is nearest and submit the written loan closure application.
- Attach the proof of last EMI payment with it.
LIC Home Loan Closure because Bad Loan
When borrower becomes bankrupt and repayment does not come through for a number of times, then the housing loan status in the bank becomes ‘Default’ until it is not written off. These loans are written off as bad loans.
- The borrower has to submit a written application for home loan closure initiation to the bank.
- A bank branch nearest can be approached and not necessarily the LIC HFL branch that provided the home loan.
The following processes occur:
1. The borrower’s housing loan status has to be updated from ‘Default’ to ‘Settled’
2. SOA (Statement of Account) Update: It is usually in the form of a passbook or a statement printout and lists all transactions of the borrower’s banks account. It contains information on withdrawals, deposits and the balances. The bad LIC home loan settlement will reflect here as written off.
3. CIBIL Score Update: CIBIL score of the borrower gets affected negatively on a bad loan closure impacts CIBIL negatively. If timely repayments of installments were done, then the credit score can be improved on.
Closure through Settlement of LIC Home Loan
A settlement of housing loan is done if the borrower does not pay off dues. Here are the following procedures:
- The borrower receives three months from bank, during which LIC HFL will assess his/her repayment recoverability.
- When the due amount is irrecoverable, the loan account becomes a non-performing asset (NPA).
- The borrower is then known as ‘defaulter’ (financial term), until loan is not settled.
- Loan settlement affects CIBIL score negatively for a short term.
- Reflection on timely loan repayments will eventually strengthen the credit score of borrower.
When home loan closure is initiated by sending a written application by the borrower on visiting a nearby LIC HFL branch, the following procedure occurs:
1. SOA update: The housing loan little will reflect here until all repayments are not done with. Here are some of the ways by which borrowers can repay the loan:
- Restructuring of loan
- Prepayment of rest of loan
- Reimbursement of the investment
2. Offer Letter: The home loan when settled reflects as ‘Settled’ in bank account.
3. CIBIL Score Update: Home loan settlement is closure of it and affects credit sore of borrower negatively, but the same will recover on receipt of credit report and timely repayments.
Sample Letter for Closure of LIC Home Loan
The Bank Manager
LIC Housing Finance Limited
[Address of the branch where loan closure was done]
Subject: Home loan closure request
I, [Your name] had a home loan issued under my account number – […………………] which I have successfully repaid. All dues have been cleared. I have attached the proof of last EMI payment. I request you to further initiate the closure and deliver me a letter of acknowledgement authorizing the successful loan closure. The following documents shall be due for collection after closure acknowledgement:
- Original Property Documents
- Loan closure certificate or NOC/NDC
- CIBIL score update
Thanking you for your help,
Documents the Bank Will Provide Borrower after Home Loan Closure
On tendering a written application or letter to the bank, the following documents will be released to the borrower:
1. Property Deed
- The property deed file’s original form should be collected.
- It contains payment receipts, original sale deed, POA, cancelled cheques and possession letter etc.
- These are important during initiating sale of the property or taking loan against property.
2. Loan Closure Certificate (LOC) or No Dues Certificate (NDC) No Objection Certificate (NOC)
- The LIC HFL provides NOC letter to the provider.
- It is a proof that there is no debt on property anymore.
- It also certifies that the loan’s principal amount and interest is completely paid for.
3. CIBIL Score
- The CIBIL score of borrower updates every 28th of the month. The bank shares loan related payments details with CIBIL.
- The home loan closure affects the CIBIL score. If it is closed in any manner other that decided prepayment or tenure completion, the credit score weakens.
- CIBIL score can be improved with sound financial behavior such as timely repayments on loan and payment of credit card bills.
4. Memorandum of Deposit
The MOD is with borrower at the start of the loan and provided by the bank.
5. Promissory Note & thank you note.
Some Precautions for the Borrower
After closure of the home loan and clearance of the same from the bank, the borrower must do the following procedures (collection of original files of all the listed documents):
1. Original Documents
Borrowers need to collect the original file of the following documents:
- Statement of loan account reflecting all details of loan and interest repayments
- Original title and deed document
- Legal Scrutiny Report that all dues have been cleared
- Original property tax paid receipts or copies if possible
- Original or certified copy of title deed of previous owner
- Approved layout and map issued by governmental authority or similar
2. Removal of Lien
- Lien on property indicates that the borrower cannot sell the property until he/she pays off the loan and its dues. The bank initiates this process.
- A lien is a transaction that is registered with the registrar of properties against the concerned property.
- The borrower must find that a lien exists on property or not. He/she can take help of the bank executive to remove the lien from the property.
3. Encumbrance certificate (EC)
- Issued by registrar, Encumbrance certificate denotes that the property is free from lien and debt.
- It has all details to financial transactions in the name of the concerned property.
- EC is available from local registrar’s office. The borrower must write an application to LIC HFL.
4. Lawyer clearance certificate
- The lawyer clearance certificate is second opinion on the property.
- It verifies that the property is not under any debt or lien.
- This certificate is crucial at time of loan against the same property and the selling of it.
LIC Home Loan Closure FAQs:
1. When should the borrower visit the bank for LIC housing loan closure?
Weekdays are convenient for home loan closure proceeding than weekends.
2. What are the charges for prepayment of LIC home loan?
Loan prepayment may carry applicable charges as stated by the bank.
3. Which documents are essential to observe after housing loan closure?
- Principal and interest statement
- Home loan EMI statement
- Final home loan closing statement
4. What are the other ways by which one can close LIC home loan?
The closure of LIC housing loan may be quickened with accelerated repayment scheme or other options available at the bank.
5. What are the penalties on delayed EMI payments?
The bank may ask for 0.2% of the unpaid amount if the EMIs are delayed.
6. What is the duration after which home-loan-closure affects borrowers CIBIL score?
It is 3 months after closure date that it affects the credit score of the borrower.
7. When will the borrower receive CIBIL score update from the bank?
It will take a month (after credit score update) to share CIBIL score update with the borrower.
8. Does the bank allow download of amortization sheet?
The borrower can download from housing loan closure portal of LIC’s official website but later to a month from the closure date of the loan.
9. Will LIC HFL take responsibility of damages to home property deed file during courier?
The bank is not going to take any responsibility for loss, damage or mutation to home property deed file during courier.
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