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Home > Glossary
Glossary

Compressive strength and tensile strength: Strength is determined by how much weight a material can support or how much stress it can withstand. Compressive strength is the maximum stress that a material will bear when it is subjected to a load that pushes it together. Tensile strength is the maximum stress a material will bear when it is subjected to a stretching load.

Fiberglass: A composite material made of fine glass fibers woven into a cloth then bonded together with a synthetic plastic or resin.

Plastics: Solid materials consisting of organic polymers.

Stress: Force per unit area. It is measured in the same units as pressure, namely pascals (Pa). Materials typically have strengths in the mega Pascal (MPa) range (1 MPa = 1,000,000 Pa).

The Advanced Composites Programme aims at developing certain critical inputs in terms of raw materials, design capabilities, manufacturing methodologies, skilled manpower and testing devices. The Programme also attempts to bring together the research institutions & industries and strives for turning India into a leading nation in composite technology and applications.

Advanced Composites Programme (ACP) focuses on:

  • Development and commercialization of select composite products
  • Promotion of composite applications (process equipment, transportation sector, bio-medical devices, marine operations, sports goods...)
  • Improving industry-laboratory linkages for technology development and transfer
  • Providing soft financial assistance to industries on repayable basis for projects on composites technology

Accessories: An additional feature or extra item which is added to a basic car, like Music system, clock etc.

Amortization: Amortization 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.

Annual Rests: This is more commonly known as Annual Reducing Balance of the principal amount lent to you. In an annual rest the EMIs are calculated on an annual basis. The interest is calculated on the outstanding principal at the beginning of every year. Once the interest is calculated at the rate charged to the customer for the entire year it is deducted from the EMIs received during the year. The balance EMI is taken as principal repaid during the year and this is deducted from the opening balance of principal of the current year to arrive at the opening balance of principal for the next year. Under this method, typically the component of interest in the EMI is higher for the first few years and later on the component of principal increases and the interest keeps reducing year after year. In other words, the interest in the EMI will keep reducing year after year and the principal component in the EMI keeps increasing.

Asset: An immovable or movable property, which can used as a security against which credit can be offered.

Bounce charges: These charges are levied by the HFI if your cheque gets dishonored due to some reason.

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.

Co - owners: All HFIs insist that all co - owners have to be co - applicants necessarily. No minor is allowed to be a co - owner as a minor cannot enter into a contract as per law.

Cost of property: This refers to the total cost of the property including various charges as acceptable to the HFI. This normally includes the agreement value of the property, the stamp duty and registration charges, the society transfer charges, garage charges for parking cars, electricity connection and water connection charges. The cost of the property will also include any additional furnishings done by the developer, for which an amenities agreement has been entered into between the customer and the developer that has been duly stamped and registered. The cost of the property, however, does not include any cash transactions involved in the purchase of the house over and above those mentioned in the agreement.

Credit Profile: Profile of an individual or companys capacity to receive credit and honour the terms and conditions of commercial credit.

Depreciation: The decline in value of an asset over a period of time.

Eligibility: This is the loan amount that you get based on your repayment capacity. Your eligibility depends on the norms set by the HFIs. Typically, the eligibility computed would be lower of the Loan to value ratio (LTV), Installment to Income Ratio (IIR) and Fixed Obligation to Income Ratio (FOIR) as per the norms of the HFI.

EMI: The loan can be repaid by paying a fixed amount every month, known as Equated Monthly Installment. [Top] Encumbrance: The encumbrance clause under the NOC ensures that no one else has a right or mortgage on this property.

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.

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-employed professionals who are practicing on their own, GMI would reflect their Gross Professional Receipts while for self-employed non-professionals; GMI stands for Net profits that they earn from their business.

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.

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.
Lender: one who lends money.
 
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.

Margin Money: Financiers do not fund the full value of the asset. They expect the customer to bring a certain % of the asset as margin. This is called Margin Money.

Monthly Rests: This is also called Monthly Reducing Balance of principal. The calculation in this method remains the same as above except that the balance is calculated on a monthly basis and the EMI is broken up every month to arrive at the opening balance of principal for the next month.

Mortgage: This is a form of hypothecation of the property to the HFI. There are three types of mortgage. They are: Equitable mortgage - where the mortgage is by way of deposit of title deeds i.e. all the documents of the property have to be deposited with the HFI. Mortgage by way of Memorandum of Entry - In this case you have to sign a declaration stating that you are mortgaging the property to the HFI. This declaration is then entered into the Memorandum of Entry of Mortgage that can be enforced in case you default in the payment of installments. Registered mortgage or English mortgage - This is the safest form of mortgage for a HFI. No documents of the property are required to create this kind of a mortgage. You just need to enter into a mortgage deed with the HFI, which needs to be stamped and registered for it to be enforceable. This is an expensive way to create a mortgage.

Octroi: This is a tax or cess applicable on goods, which have entered a particular city/ town.

Own contribution / Margin money: This is the minimum amount of money that you need to put as your own contribution towards the purchase of the house. Most HFIs insist that this amount is paid upfront before they release any disbursement.

Personal Guarantor: Some HFIs insist that you provide for 1 or 2 Personal Guarantors. The guarantor is required to meet the norms specified by the HFI, which is similar to the norms of an applicant.

Pre - approval: In a Home Loan, you have a facility to apply for a loan before you decide on the property. The loan is sanctioned however, disbursement takes place only after the property is selected and is technically and legally cleared. Such cases are called Pre - approvals as the loan is approved before the customer selects a property. This helps you to decide on a budget to buy a property of your choice.

Prepayment: At any point in time you can pay back the loan amount either in parts or in full. This is called a prepayment. Normally, HFIs have a cap on the number of times that a person can prepay his loan amount during a financial year and on the minimum amount that can be prepaid.

Principal: The capital sum in a finance transaction as opposed to interest.

Prime rate: an adjustable rate programme that offers a low rate on construction based on prime. 

Rate lock: an agreement between the loan applicants & the mortgage bankers guaranteeing a specified Interest rate for a designated period, usually 60 days.

RC Book: As per the Motor Vehicles Act vehicles are registered by a Regional Transport Office (RTO), which registers each car and provides the owner with a Registration Book (RC) which contains details on the Name of the Owner, address, technical specifications etc.

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.

Registered Owner: Name of the person in whose name the vehicle is registered.

Rentals: The repayment amounts paid in a lease contract.

Returns: Yields or Profits made in a financial transaction.

Risk: Chance or danger of a loss of capital and or interest in financial transaction.

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