If you are planning for home loan or already have one, here are must know terms which you should be aware of. If any confusion in understanding these words may lead you to complication later.
When loan is sanctioned, amount is disbursed from the hands of home loan company to the seller. A full disbursement is when the entire cost is paid in single shot. It is never in cash, all the payments are made in cheque after the documents are submitted.
Equated Monthly Installment is a partial monthly payment made towards your loan amount. It is an unequal combination of your loan amount (principal) and the rate of interest charged by your respective bank.
3) Fixed or Floating
Fixed home loan rates are the rates that stay fixed over the tenure of the loan and do not change. Floating home loan rates will vary over the period of the loan and are linked to the prime lending rate or retail prime lending rate of an institution or bank. Click here to know more.
Pre- EMI is applicable when you buy a home which is under construction, in such cases banks wont pay the entire amount to builder, they make partial payment depending of the stage of construction.
Pre-EMIs are payments made on the rate of interest on the amount partially disbursed amount. EMI are payment when the full amount is disbursed.
When you apply for home loan, only 80 per cent - 90 per cent depending on the eligibility is paid by the bank, rest 10-20 per cent should be payed by you to the builder that is called margin or downpayment.
6) Pre-approved property
One must have noticed in advertisement about the pre-approved property. IT means that builders have verified their documents by home finance companies. If everything is in order, the builder will get astamp of approval.