Understanding Encumbrance Certificate in Home Loan and Property Purchase

Buying a home is one of the most important financial decisions you will make in your life. It is also a decision that will have a deep impact on the way you live. Home loans involve a substantial amount of money and therefore, home loan EMIs generally take up a significant portion of one's monthly income. So, if you are planning to buy a home and plan to facilitate your home purchase with the help of a home loan, you must try and make sure that the property you are investing in is not mired in any problem or legal trouble and is safe to invest in. One of the best ways to do so is through the encumbrance certificate. 

The encumbrance certificate is an important document that establishes that the property that one plans to invest in is free from all kinds of lien, i.e. any legal or monetary liability. In the absence of the EC, home buyers cannot avail themselves of a home loan. 

If you are planning to buy a home, here's how you can avail yourself of an Encumbrance Certificate. 

1. To avail yourself of the Encumbrance Certificate, the home buyer must first make an application to the registrar's office. Please note that the application is considered complete only when borrowers attach all the required property documents, including the title documents, along with their application. You will also be required to attach KYC and income proof documents along with your application.

2. After you have made an application, you will be required to pay a small fee.

3. Once you have paid the fee, an officer will work on your application and fetch all the required details. 

4. After this, they will release an Encumbrance Certificate containing details of all the transactions that had happened on and against the property for the period specified in your application. 

Please keep in mind that sanctioning the encumbrance certificate takes time. So, please keep at least a few weeks' buffer time with you. 

What Does the Encumbrance Certificate Contain? 

Once you have the Encumbrance Certificate, check its property. It should contain information about all loans that have been taken against the property. It should also contain information about the number of times the property changed hands within the specified period.

Please note that the encumbrance certificate will contain only those details that were shared with the registrar's office. If some details were not shared with the registrar's office, one will not find them in the encumbrance certificate. 

If you are planning to buy a home, please make sure to get the encumbrance certificate. Also, make sure to keep this certificate safely with you with all the property documents.