YOU MUST KNOW 10 HOMELOAN TERMS IN BANGALORE

Margin

When you take a loan, the home loan company will not put up the entire amount. It will only put up around 80% to 90% of the cost of your home. You will have to put in the balance 20% or 10%. Even if they go up to 95%, you will still have to put in the balance 5%. This amount is called the down payment or the margin.

Resale This is the term used when you are buying a home from someone who already owns it and is selling it. Hence it is referred to as a resale. It indicates you are not buying a brand new home straight from the builder or buying one currently under construction.

Creditappraisal The home loan company will take a look at a number of parameters before a loan is sanctioned. Your savings, income, age, qualifications, nature of work and work experience are some of them. They will also look into how many loans you are currently servicing. Taking all these issues into account, they will determine whether or not you are eligible for a loan and what the sanctioned amount should be. This process is known as a credit appraisal.

Pre-approvedproperty

Many builders get their properties pre-approved by home finance companies. Generally, if a builder gets pre-approved by a number of players, it speaks well of the builder. The home finance company will examine all the legal documentation and approvals. If everything is in order, the builder will get a stamp of approval. Also, the home loan player will view the builder's ability and track record to complete the construction in time. However, this does not mean the home finance company is going to take any action or waive any charges if the construction is delayed. All it means is that the property falls within the legal purview and the builder has a good track record.

Equated Monthly Installments

An EMI is the amount of money you will have to pay every month in order to repay your loan. An EMI is an unequal combination of your loan amount (principal) and the rate of interest. The EMI remains constant throughout the repayment period. Let's say you have a five-year loan with an EMI of Rs 4,400. You will have to pay this amount for the next 60 months to the home loan company. To arrive at the EMI, the home loan financier will look at The principal (the actual loan amount). The repayment period (the number of years you will take to repay the loan). The rate of interest. How the rate of interest is computed (monthly reducing, quarterly reducing or annual reducing basis).

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