Buying a house is one of the most important decisions for everyone. We are here to guide you in taking an informed decision as you embark on this journey of home ownership.
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Acre
A unit of area equivalent to 43,560 square feet or 4,047 square meters approximately.
It is a commonly used term for larger land parcels in India.
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Allotment Letter
A letter issued by the developer (private or state development agency) allotting a
particular plot or unit in an under development or under construction project. This letter is
important in availing loan from banks. It is generally superseded by builder-buyer agreement once
that is signed.
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Amortization
The loan payment consists of a portion which will be applied to pay the accruing
interest on a loan, with the remainder being applied to the principal. Over time, the interest
portion decreases as the loan balance decreases, and the amount applied to principal increases so
that the loan is paid off (amortized) in the specified time.
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Amortization Schedule
A table which shows how much of each payment will be applied toward principal and how
much toward interest over the life of the loan. It also shows the gradual decrease of the loan
balance until it reaches zero.
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Co-Borrower
A party or individual who cosigns a mortgage loan. Co-borrowers are jointly liable
with the other borrower for the balance of the loan period.
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Completion Certificate/ Statement
A certificate/ statement issued by the local development authority certifying that all
necessary works have been completed and that the property is fit for occupation. In case of private
development, such certificate can be given by the builder to individual unit owners at the time of
possession.
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Downpayment / Margin Money
The part of the purchase price of a property that the buyer pays in cash and does not
finance with a loan
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Encumbrance Certificate
A report issued by Registrar of Assurances or Sub-Registrar's office after due
verification of the relevant documents certifying that the property in question is free from all
encumbrances such as loans, leases, easements or restrictions
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Fixed Interest Rate
An interest rate on a loan that remains fixed either for the entire term of the loan
or for part of the term and does not increase or decrease with market fluctuations.
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Floating Interest Rate
An interest rate that is allowed to move up and down with the rest of the market or
along with an index.
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Foreclosure
A situation in which a homeowner is unable to make principal and/or interest payments
on his or her property loan, so the lender, be it a bank or building society, can seize and sell the
property as stipulated in the terms of the loan agreement.
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Loan Processing Fee
A fee paid to a lender (bank) for processing application of a loan. This fee is
charged by the lender to cover its administrative and other application related costs.
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Loan to Value (LTV) Ratio
The amount of the loan financed as a proportion of the property value, expressed as a
percentage.
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No Objection Certificate (NOC)
A certificate issued by the concerned local authority that the plans are in order and
conform to the guidelines and rules in force. In other words, the authority concerned has NO
OBJECTION to the commencement of construction
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Occupancy Certificate
A certificate issued by the local development authority certifying that all necessary
works have been completed as per the sanctioned plans and that the property is fit for occupation.
The OC is issued after clearance from the water, electricity, sewerage, fire fighting authorities
etc.
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Pre Approval
An evaluation of a potential borrower by a lender to determine whether the borrower
qualifies for a loan
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Principal
The amount borrowed or still to be repaid. The part of the monthly payment that
reduces the balance of the loan.
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Refinance
The process of paying off one loan with the proceeds from a new loan using the same
property as security.
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Resale Property
Resale signifies that a property is being sold by the person who was allotted the same
property. In other words, when property once purchased is now put on sale by the initial buyer, the
property is said to be on resale.
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Stamp Duty
Stamp duty is the tax governments place on legal documents, usually in the transfer of
assets or property.
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Title Search
An investigation of public records into the history of ownership of a property to
check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free
and clear ownership.
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Under Construction Property
A property which has received all necessary approvals from authorities, raised funds
from private investors or financial institutions, appointed the construction contractor and is
currently under construction.
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