Getting a home loan has become one of the prime essentials for the home aspirants who are looking to buy their dream home. But it can become increasingly difficult to avail a housing loan, as there are quite a number of complicated topics to understand. Banks and financial institutions often use a number of technical terms or more commonly referred, technical jargons which might sound new for home buyers. But it is essential to understand them in order to get the right perspective while attaining a home loan.

We have listed out a few technical terms used by banks and financial institutions to avail a home loan. These terminologies can come in quite handy if you are new into the property game and want to get off to a flying start.

  • Margin - It is essentially the difference between the loan amount the bank provides and the total value of the property. A bank cannot provide a loan of more than 80% of the property’s total value
  • Offer Letter - This is a formal confirmation letter, also known as home loan sanction letter. This is provided when the bank has considered you as an eligible loan customer and has approved your applied loan
  • Resale - This is the term used when you are buying a home from someone who already owns it and is selling it
  • Credit appraisal - Banks take a look at a number of parameters before a loan is sanctioned. Some of the parameters include savings, income, age, qualifications, nature of work, work experience, loans you are currently servicing etc. This process is referred to as Credit appraisal
  • Repayment tenure - Repayment tenure is the tenure or the number of years for which the loan gets sanctioned
  • Disbursement - Disbursement is referred to the release of the loan amount from the bank to the borrower or builder. A loan will be disbursed after all the documents have been provided to the bank and the bank has approved the loan
    • Full Disbursement - A full disbursement is when a bank disburses the entire loan amount all at once
    • Partial Disbursement - A partial disbursement is when the bank releases a part portion of the loan as requested by borrower
  • Equated Monthly Installments (EMI) - EMI is the monthly payment a borrower has to make towards a loan. EMI starts once the loan has been disbursed and you can calculate your EMI using the home loan emi calculator.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.