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This glossary has been carefully compiled for you to understand some key terms that would help you while evaluating offers for your credit card / Loan requirement.

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.
Amortisation :
Amortisations means the method or the calculation by way of which the entire principal / loan amount is paid through the tenure of the loan. This helps a customer to know what his outstanding principal is at any point in time.
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.
Asset:
An immovable or movable property which can used as a security against which credit can be offered.
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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.
City Survey Nos.:
This is a number given to plots of lands falling within the purview of urban development plans of the Town Planning Authority.
Compound Interest :
Interest charged or paid on the principal and the accumulated interest, unlike Simple Interest which is paid only the principal.
Co - Applicant :
As a customer you have an option of having a co - applicant to your loan. The co - applicant cannot be a minor and most HFIs allow for only brother - brother, parent - son and husband - wife combination for a co - applicant.
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Documentation:
The papers to be signed in connection with the loan at the HFC, i.e. the loan papers, is called documentation.

1. Offer Letter
2. Disbursement Advice
3. Demand Notice / Payment Notice
4. Sale Agreement
5. Stamp Duty
6. Registration
7. Own Contribution Receipts
8. Layout
9. Approved Plans
10. Commencement Certificate
11. Completion / Occupation Certificate
12. Possession Letter
13. Conveyance Deed
14. Disbursement Details
15. Allotment Letter
16. 7 / 12 Extract
17. Property Card

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.
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Fixed Rate of Interest :
This is an option that is available to you when you avail of a Home Loan. Under this, the rate of interest remains fixed over the tenure of the loan. The rate remains constant after the final disbursement has been made. This is an ideal option for situations when you expect the rates of interest to go up in the future. Hence the fluctuation in the rates does not affect you adversely. In case of Home Loans where the disbursement takes place as per the stages of construction of the property, the interest rate in the market may change during this period. Irrespective of the fact that you may either be under the fixed rate or the variable rate scheme, the new rate of interest would apply to the extent of undisbursed portion of your loan amount. The rate of interest remains fixed at the final weighted average rate at which the loan is disbursed.
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Gross Monthly Income :
GMI stands for the Gross Monthly Income of an individual as considered by a HFI to calculate his loan eligibility. For a salaried customer GMI would indicate the Monthly Income on his salary slip including any Fixed Income generated regularly from a fixed source. For Self-empoyed professionals who are practising on their own, GMI would reflect their Gross Professional Receipts while for self-empolyed non-professionals, GMI stands for Net profits that they earn from their business.
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Insurance Cover Note :
Insurance companies issue a note first, which confirms that the asset has been insured. The policy normally takes few days as it has to be processed by the company. This note which is issued before the actual policy is made is called Insurance Cover Note.
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.
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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.
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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.
Lease :
Contract by which the owner of an asset lets it out for use to another for a specified time on payment of a specified amount called rental.
Lending Rate :
The interest charged by the financier on the amount financed.
Lien :
Under the NOC a clause of Acceptance of Lien is covered. This simply states that you have accepted to mortgage your property and can not sell it to any one else without the consent of the HFI.
Load Bearing Construction :
Developers for properties that do not exceed 1 or 2 floors use this term. There is no concept of slabs and columns in this kind of construction and therefore the load that can be borne by this kind of construction is far lower than that in a framed construction.
Loan Tenure :
The time duration for which loan has been provided
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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.
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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.
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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 authorized to do or represent is called agent. It may be either notarized 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.
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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.
Refinance / Balance Transfer:
If you are an existing home loan customer and you have availed of the loan at a higher ROI then you have the option to switch to a lower rate of interest. You could do this either from the same HFI or from a different HFI. Kindly go through the Switch product for more details.
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.
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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.
Stages of Construction:
Typically, disbursement takes place on the basis of the stages of construction of the property. Broadly, the stages of construction are classified as follows:

• Stage of Construction Percentage (%)
• Plinth / Foundation 15
• RCC complete 55
• Brickwork complete 70
• Internal and external plastering complete 85
• Plumbing, electrification and flooring 95
• Windows, doors and painting 100
• Note: Kindly note that the above percentages can differ based on the type of construction, number of floors, etc.

Tax Benefits :
These are the tax benefits that are available to a Home Loan customer. Please go through Tax benefits in the Home Loan page for more details
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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.
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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.
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