When a homeowner repays their home loan in full, the bank's charge on the property does not automatically disappear from the revenue records. The mortgage must be formally released , both by receiving the original documents from the bank and by executing a formal release / discharge document. Skipping this step creates a title defect that will surface when you try to sell the property.
What is a Mortgage Release?
When you took a home loan, the bank created a charge on your property , either by depositing the title deeds with the bank (equitable mortgage) or by registering a mortgage deed at the Sub-Registrar (registered mortgage). When you repay the loan fully, this charge must be formally removed. The process differs depending on the type of mortgage.
Type 1: Equitable Mortgage (Most Common for Home Loans)
Most home loans in India are equitable mortgages , the borrower deposits the original title documents with the bank as security, without registering a formal mortgage deed. When the loan is fully repaid:
- The bank issues a No Objection Certificate (NOC) or Loan Closure Letter confirming the loan is fully repaid.
- The bank returns all original title documents to the borrower.
- The bank issues a letter requesting cancellation of the equitable mortgage entries from the Sub-Registrar records (if any memorandum of deposit was registered).
Equitable mortgages are not always registered, so in many cases no formal release deed is required , the NOC and original documents are sufficient. However, if a Memorandum of Deposit (MoD) was registered, a formal release must be executed.
Type 2: Registered Mortgage Deed
If the bank registered a formal mortgage deed at the Sub-Registrar office, the mortgage will appear in the Encumbrance Certificate. To remove it:
- Obtain a Discharge Deed or Release Deed from the bank acknowledging full repayment.
- Register the Discharge Deed at the Sub-Registrar office , the same office where the original mortgage was registered.
- Pay the applicable stamp duty and registration fee for the release deed (nominal , typically ₹200–₹500).
- Once registered, the release deed will appear in the EC and cancel out the mortgage entry.
Documents to Obtain from the Bank on Loan Closure
- Loan Closure Letter / NOC confirming the outstanding balance is nil
- All original title documents deposited with the bank (sale deed, EC, Khata, building plan approval, OC etc.)
- Release Deed / Discharge Deed (if a registered mortgage was created)
- CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest) record cancellation , the bank must cancel the charge in the CERSAI registry
- Form 35 (Release of Charge) from the bank for the CERSAI cancellation
Check the EC After Release
After obtaining the release deed and completing the CERSAI cancellation, obtain a fresh EC to confirm that the mortgage entry has been cancelled and no charge appears. An EC that still shows an active mortgage entry , even after loan closure , means the release formalities were not completed. This will show up as a red flag when you sell. See: How to read an Encumbrance Certificate.
Delays and Non-Cooperation from Banks
Banks are legally required to return original documents and issue closure certificates within a reasonable time after full repayment. If your bank is delaying, escalate through their grievance redressal mechanism. As a last resort, an RBI complaint can be filed against a regulated lender. Persistent refusal to release documents can be challenged in a consumer forum or civil court.
Before You Sell , Check This First
If you are planning to sell a property that was under a home loan (even if the loan is now closed), verify that the EC is clean , no mortgage entry should appear. Our team at Clawrity checks EC entries as a standard step in every property verification. Also see our complete property document verification checklist.