Annual rest

The EMI is collected from the borrower every month and the appropriation towards interest and principal is made at the end of the financial year. This kind of appropriation is on annual rest basis.

Acceptance Letter

Once the sanction letter is issued, the applicant will, on reading the terms of the issue, communicate his willingness to accept the loan by way of an acceptance letter within a particular time frame which varies between 1-3 months from the date of the sanction letter and also pay the requisite administrative fee.

Carpet areas

Areas of useable at any floor level as worked out in the plinth area minus the area occupied by the walls.

Clear title

It is a title which is free from any reasonable doubt and also free from all encumbrances.

Close relatives

As per section 6 of the Companies Act, a close relative acceptable as guarantor is any of the following:

Father, mother (including step mother), son (including step son), son’s wife, daughter (including step daughter), son’s son, son’s son’s wife, son’s daughter, son’s daughter’s husband, daughter’s husband, daughter’s son, daughter’s son’s wife, daughter’s daughter, daughter’s daughter’s husband, brother (including step brother), brother’s wife, sister (including step sister), wife/husband and sister’s husband. However for consideration of these relatives as guarantors for the loan they should comply with the age and other norms of the company.

Common areas

It is actually the covered area of the common spaces and areas meant for use by the occupants of the building. These areas may include staircase, lifts, ducts for sanitation, electrical and air conditioning areas etc. This area is generally divided proportionately in relation to the size of the apartment and charged accordingly.

Credit Appraisal/Personal Interview

Every HFC has its panel of credit appraisal officers who process your application. They take into account factors like income of the applicants, number of dependents, monthly expenditure, repayment capacity, employment history, number of years of service left over and other such factors, which affect the credit rating of the borrower. Proof of income will also be verified for the purpose of approval of the loan. Some information may also be requested for the approval of the loan. The time taken for receipt of such information is crucial since it will affect the length of time required for a loan approval.

The loan officer will also request applicants to the branch for a credit interview.

Documentation

The papers to be signed in connection with the loan at the HFC, i.e., the loan papers, is called documentation.

EMI

Equated Monthly Installment. This is the installment amount the borrower has to make towards repayment of his loan. The EMI comprises of both the principal and interest.

Encumbrance

This records details of transfer of ownership of a property in succession upto the current owner. It shows the date, the names of the parties involving the amount of consideration, the extent and schedule of the property. This certificate can be obtained from the sub registrar’s office for a payment of fee from any previous year till date. This certificate is also useful in establishing the events as to how and when the present owner came into possession of the property.

Inspection of property

Inspection of property intended for purchase/construction is done at regular intervals, both before and after disbursement of the loan.

Post sanction inspection of the property is done at each stage of the disbursement to ensure that the margin money is invested by the borrower and the progress of work is as per schedule.

Khata, Chitti, Adangal

These are basic documents called by different names in different places indicating the ownership of property as entered in the register of the Government authorities.

Legal scrutiny report

The documents pertaining to your property needs to be scrutinised by legal personnel of the HFC to ensure that you are buying a property that is clear and marketable. This is one of the first criteria to take care of, so that the transaction is proper and the property can be passed onto your legal heirs.

License for construction

A permission to construct or an authorisation in writing issued along with the sanctioned plan.

Margin amount

The difference in the total cost of the project and the loan amount sanctioned is the margin amount.

This money has to be invested by the borrower of the property prior to the release of the loan amount in case of construction of a house. In case it is for purchase of a house, then the loan amount will be released on the day of registration of the property and the margin money has to be invested by the borrower prior to the release. In case of purchase of flats also, the release will be made only on investment of the margin money by the borrower.

Marketable title

When the title to the property is clear and the person has the right and capacity to transfer the same then he is said to have a marketable title.

Market value

It is the value of the property as per the prevailing market rates.

Obligation of the borrower

The borrower in terms of the agreement will be obligated to keep up the schedule of repayment, to deposit the post dated cheques periodically and to keep the property free from encumbrance.

Penal interest

If the installments are not received as per the repayment terms, by the end of the month, the borrower will be charged interest on the installments delayed which is called as penal interest.

Plinth area

Area measured externally of the whole building. This includes balconies, however this will not include common areas in apartment blocks/commercial buildings and spaces.

Power of attorney

It is an instrument empowering a specified person or persons to act for and in the name of the person executing it. The person for whom the act is done or who is so represented is called principal. The person who is so authorised to do or represent is called agent. It may be either notarised or registered depending on the transaction.

Pre-EMI

The EMI for the loan will begin after the loan has been disbursed in full. Till such time the borrower has to pay the interest for the loan. This amount of interest payable every month is called as pre-EMI.

Prepayment

It is the amount paid towards principal ahead of the prescribed repayment schedule. The benefit of interest is given to the party in such cases as per the norms of the company.

Pre-sanction inspection of property

Immediately on receipt of the application of the loan application, a loan officer from the HFC will conduct an inspection of the property to ascertain the location of the property, verify the technical details of the house like structural stability etc and the stage of construction, if the loan is for construction.

Property tax

This is the tax levied on the property by the local authority such as Corporation, Municipality, etc to the person in whose name the property stands.

Registration value

It is the value of the property at which the property is registered. Generally the rates for the value for registration is fixed for specific areas by the authorities in many places.

Repayment

The payment of EMI or pre-EMI as applicable is called as repayment of the loan. In case of NRIs this amount should come from Non-Resident (External) Account/Non-Resident (Ordinary) Account in India.

Role of guarantor

Commitment by way of agreeing to the terms and conditions of the loan and liable to the extent of the loan/liability together with the interest and other charges.

Sale agreement

It is an agreement which is entered into between the parties for dealing with the property and which creates a right to obtain a sale deed mentioning the property. Normally it fixes a time for completion, payment of earnest money or part payment of purchase consideration. Generally it is a document that precedes a sale deed and in such cases does not require registration and will also not confer any charge or right on the property. However in some states the sale agreement itself will be registered and will act as a sale deed.

Sale deed

It is an instrument in writing which transfers the ownership of the property or properties in exchange for a price paid/consideration. This is a document that requires to be registered compulsorily.

Sanction letter

Once the loan is approved, a letter communicating the sanction terms and conditions will be issued to the party.

Sanctioned plan

A drawing containing the plans, section of elevations of areas along with detailed schedules, specifications and area statements on which the sanctioning authorities grant permission to carry out work as regulated in the bye laws.

Stamp duty

It is the duty/fee payable on the different instruments/documents as per the prescribed rate. This differs from state to state. The adequacy of stamp duty should be ensured to make a document valid and enforceable.

Statement of account

The statement indicating the outstanding loan amount, the amount paid by the borrower, the appropriations made towards interest and principal, etc. at the end of the financial year.

Submission of loan application form

The loan application form asks for information of the borrower, his family, details of his income and expenditure and his financial history, cost of the property, availability of resources, details of personal finances including bank account numbers, details of property proposed to be purchased etc.

Super built-up areas

Plinth area + proportionate share of ‘Common Areas’.

Title

It is the right and interest over the property evidencing the ownership.

Urban land ceiling and regulation

The Urban Land (Ceiling & Regulation) Act 1976 for the imposition of a ceiling on vacant land in urban agglomeration, for the acquisition of such loan in excess of ceiling limit, to regulate the construction.

Who can be the guarantor for the loan

Any individual who has good income/net worth can be a guarantor for the loan. In case of non-resident Indians, the guarantors are to be close relatives as defined under Section 6 of the Companies Act.