1070+ property terms explained in plain words: RERA, land records (Fard, Jamabandi, 7/12, Patta), documents, law, tax, finance and state-specific vocabulary. Each term has its legal basis, an Indian example and a tip for agents.
Reviewed 16 October 2026 · 1073 terms · 14 topics
The gradual repayment of a loan through scheduled instalments, in which interest is paid first and more principal is repaid later.
Example: In the first year of a 20-year loan, most of the EMI is interest.
Agent tip: Show clients an amortisation schedule to explain why prepayment early in the loan saves more.
Also called: APR, Effective Cost of Loan
The yearly cost of a loan expressed as a percentage, including the interest rate and certain fees and charges. It shows the true cost better than the interest rate alone, which leaves out items like processing fees.
Example: A loan advertised at 8.5% with a high upfront fee has a higher APR than one at 8.6% with almost no fee.
Agent tip: Compare lenders using APR from the key fact statement, and always ask which charges are included in the figure.
Also called: ARC
A company registered with the RBI that buys bad loans from banks and tries to recover the money, often by selling or restructuring the secured property. Some properties reaching the market come from ARC portfolios.
Legal basis: Registered under the SARFAESI Act, 2002 and regulated by the RBI.
Example: A bank sells a defaulted loan on a Kharar warehouse to an ARC, which then advertises the warehouse for sale to recover its money.
Agent tip: Properties from an ARC are sold as is. Check the sale notice, the dues, and whether any court case is pending.
Related: SARFAESI Act NPA (Non-Performing Asset) Bank Auction Property
Moving an existing home loan to another lender offering a lower rate or better terms.
Example: A borrower moves a 9.3% loan to a bank offering 8.6%, saving interest over the remaining tenure.
Agent tip: Compare the processing fee and legal costs with the savings.
Related: Home Loan Processing Fee
A property sold by a bank or financial institution to recover dues from a defaulting borrower. It is usually sold "as is where is".
Example: A bank puts a flat on e-auction with a reserve price below the market value.
Agent tip: Inspect the property and legal papers. Possession, dues and litigation are the buyer's risk.
Related: SARFAESI Act Foreclosure Due Diligence
Also called: Technical Valuation, Bank Valuer Report
A valuation of the property commissioned by the lender through an empanelled valuer, to confirm its market value and construction status before it lends. The bank lends against its own assessed value, which may be lower than the price you agreed.
Example: Tarun agrees to pay ₹80 lakh for a flat in Dera Bassi, but the bank valuer assesses it at ₹72 lakh, so the loan is calculated on the lower figure and Tarun must fund the gap.
Agent tip: Warn buyers that a low valuation shifts more of the cost to them. Share nearby recent sale deeds with the valuer if the price is fair.
Also called: Gap Loan
A short-term loan taken to cover a gap, for example when a person must pay for a new home before selling the old one. It is usually repaid in full from the sale proceeds and carries a higher rate than a normal home loan.
Example: Rajesh pays the booking amount on a new flat in Panchkula using a bridge loan, planning to repay it when his old apartment sells.
Agent tip: Warn clients that if the sale of the old home is delayed, they pay costly interest. Ask for a realistic repayment window.
Related: Home Loan Booking Amount Tenure
The Central Registry of Securitisation Asset Reconstruction and Security Interest of India, an online register where lenders record their mortgages and charges. Buyers can search it to see if a property is mortgaged.
Example: A buyer searches CERSAI before paying a token amount and finds an existing bank charge on the flat.
Agent tip: Add a CERSAI search to your due diligence checklist.
Related: Mortgage Lien Due Diligence
A person who takes the loan jointly with the main borrower and shares responsibility for repayment. Each is liable for the full loan.
Example: A husband and wife take a home loan together and both claim eligible tax deductions.
Agent tip: Co-borrowers can raise loan eligibility. They need not be co-owners, but banks often prefer it.
Related: Home Loan Joint Ownership
Also called: Plot-cum-Construction Loan
A single loan covering both the purchase of a plot and the construction of a house on it. The money is released in parts, with the land cost first and construction instalments after, so the borrower does not need two separate loans.
Example: Meenu buys a plot in Kharar and borrows one composite loan, with the first release to the seller and the later ones as the walls and roof come up.
Agent tip: Check the time limit for finishing construction and what happens to interest if the work is late.
Related: Plot Loan Home Construction Loan Pre-EMI
Also called: Builder Finance, Project Loan, Developer Loan
Money lent to a developer to build a project, released in stages as work progresses and repaid from sales proceeds and buyer payments. It is separate from the loans buyers take for their flats.
Example: A Zirakpur developer uses a construction loan for the second tower, and the lender controls the sales collection account to track repayment.
Agent tip: Ask whether the project has a bank-approved loan and whether the lender has lien on unsold flats. Check that the buyer's flat is not mortgaged without the lender's consent.
Related: Escrow Account Tripartite Agreement Moratorium Period
Also called: CIR, Credit Report
A report from a credit information company that lists a person's loans, credit cards, repayments and enquiries, along with the credit score. Lenders use it to judge risk before sanctioning a home loan, and borrowers can request a free copy once a year.
Example: Before applying, Deepa gets her credit report and finds a closed credit card still showing as open, which she fixes before the bank sees it.
Agent tip: Advise buyers to check their report two or three months before applying. Errors take time to correct.
Related: Credit Score (CIBIL) Home Loan Eligibility NPA (Non-Performing Asset)
An earlier part of PMAY-Urban that gave interest subsidy on home loans to EWS, LIG and MIG buyers. It ended in 2021-22 and has been replaced under PMAY-Urban 2.0 by an interest subsidy scheme.
Example: A buyer who took a loan under CLSS in 2020 received an upfront subsidy.
Agent tip: Do not promise CLSS to new buyers.
Related: Pradhan Mantri Awas Yojana (PMAY) Affordable Housing
A three-digit number, usually 300 to 900, that shows a person's repayment record. Lenders use it to decide approval and interest rate.
Example: A borrower with a score of 780 gets a better rate than one with 650.
Agent tip: Ask clients to check their score before applying and fix errors.
Also called: DSCR
A measure of whether a property's income can cover its loan payments. It is the net operating income divided by the yearly loan instalments, interest plus principal. A ratio above 1 means the income covers the payments.
Example: A Mohali office building earns ₹1.5 crore a year after costs and pays ₹1 crore a year in instalments, so its ratio is 1.5.
Agent tip: Lenders for commercial property use this ratio. Improve it by raising rent, cutting costs or choosing a longer tenure.
Related: Net Operating Income (NOI) Lease Rental Discounting Loan Against Property (LAP)
Also called: DRT
A special tribunal set up to recover large loans owed to banks and financial institutions faster than ordinary civil courts. It hears recovery suits and appeals against actions taken by lenders under the SARFAESI Act.
Legal basis: Recovery of Debts and Bankruptcy Act, 1993. Appeals against SARFAESI action go to the DRT under Section 17 of the SARFAESI Act.
Example: A borrower in Chandigarh who thinks the bank wrongly took possession of his factory shed files an application before the Debts Recovery Tribunal.
Agent tip: Time limits are short, so a borrower who gets a notice should consult a lawyer right away.
Related: SARFAESI Act NPA (Non-Performing Asset) Section 13(2) Demand Notice
The release of loan money by the bank, either in full or in stages tied to construction.
Example: A bank releases 20% after the plinth stage, once the builder's demand letter is verified.
Agent tip: Check the bank's rules for tying disbursement to demand letters.
Related: Pre-EMI Demand Letter Tripartite Agreement
Also called: Equated Monthly Installment
The fixed amount a borrower pays each month towards a loan. It has an interest part and a principal part, and the share of principal grows over time.
Example: A ₹50 lakh loan at 8.5% for 20 years has an EMI of about ₹43,400.
Agent tip: Use an EMI calculator with the client. Show how a longer tenure lowers the EMI but raises the total interest.
A mortgage created by depositing the title deeds with the lender with the intention to secure the loan. It is common for loans in towns where the law allows it.
Legal basis: Transfer of Property Act, 1882, Section 58(f). It applies in Kolkata, Chennai, Mumbai and other towns notified by the State Government.
Example: A borrower hands over the original sale deed to the bank to create an equitable mortgage.
Agent tip: Ask the seller to confirm that the original documents are free from any such deposit.
Related: Mortgage Mortgage Deed Encumbrance Certificate (EC)
Also called: EBLR, External Benchmark Linked Rate
A home loan rate that is tied to a benchmark outside the lender's control, such as the RBI repo rate or a Treasury bill yield. Since October 2019, banks must link new floating-rate retail loans to such a benchmark, and add a spread on top.
Example: A private bank prices Nandini's loan at repo rate plus a spread, so when the repo rate changes her loan rate follows by the next reset.
Agent tip: The benchmark is the same for everyone at one bank. The spread is the number worth negotiating before signing.
Related: Repo-Linked Lending Rate (RLLR) Interest Rate Spread MCLR (Marginal Cost of Funds based Lending Rate)
A loan rate that stays the same for a fixed period. It gives certainty but is often higher at the start.
Example: A bank offers a fixed rate for 3 years, then moves the loan to a floating rate.
Agent tip: Read when the fixed period ends and the rate that follows.
Related: Floating Interest Rate Home Loan
Also called: Flexi Plan
A builder's payment plan that lets the buyer pay a small part at booking, a larger part in a few instalments, and the rest on possession, or in other mixed combinations. The exact split is in the allotment papers.
Example: A developer in Kharar offers a flexi plan with a smaller amount at booking and a larger instalment on the casting of the second slab.
Agent tip: Compare the total cost with other plans. Under RERA, a promoter cannot take more than 10% as an advance before a registered agreement for sale.
Related: Construction-Linked Plan Possession-Linked Plan Payment Plan
A loan rate that changes when the lender's benchmark changes. Most home loans today are linked to an external benchmark such as the repo rate.
Example: When the repo rate falls, a repo-linked home loan rate falls after the reset.
Agent tip: Explain that EMI or tenure can change when the rate changes.
Related: Repo-Linked Lending Rate (RLLR) MCLR (Marginal Cost of Funds based Lending Rate) Fixed Interest Rate
The share of monthly income that goes towards fixed payments such as EMIs and card dues. Banks use it to decide how much they will lend.
Example: With a monthly income of ₹1 lakh and a FOIR cap of 50%, total EMIs should stay under ₹50,000.
Agent tip: Reduce other loans before applying to raise the loan amount.
Related: Home Loan Credit Score (CIBIL)
The process by which a lender takes possession of mortgaged property when the borrower defaults. The term is also used for closing a loan early.
Example: After repeated defaults, the lender enforces its security under SARFAESI.
Agent tip: Do not confuse foreclosure of the property with foreclosing (closing) a loan.
Related: SARFAESI Act Prepayment
A person who promises to repay if the borrower defaults.
Example: A bank asks a parent to be guarantor for a young borrower's loan.
Agent tip: Warn guarantors that they are liable.
Related: Co-borrower Home Loan
Also called: Self-Construction Loan
A loan to build a house on land the borrower already owns or has the right to build on. The bank releases money in stages as construction progresses, usually after an engineer inspects the work.
Example: Harbans owns a 250 square yard plot in Mohali and takes a construction loan, and the bank releases each tranche after its engineer inspects the plinth, the slab and the finishing stage.
Agent tip: Check that the building plan is sanctioned before applying. Most banks will not release funds without it.
Related: Sanctioned Plan Disbursement Pre-EMI
Also called: Home Renovation Loan, Home Extension Loan
A loan for repairing, renovating or extending a house the borrower already owns, such as painting, plumbing, flooring or adding a floor. It is repaid over a shorter period than a normal home loan and the rate is often higher.
Example: Lakhbir takes a loan to retile his ground floor and add a bathroom, and the bank pays the contractor in two instalments after inspecting the work.
Agent tip: Keep estimates and bills ready. Banks usually pay against quotations and check progress.
Related: Home Loan Disbursement Tenure
Also called: Housing Loan
A loan from a bank or housing finance company to buy, build or renovate a home, secured by a mortgage on the property. The buyer repays it as monthly instalments over a fixed tenure.
Example: A buyer takes a ₹50 lakh loan for 20 years at a floating rate and pays EMIs from salary.
Agent tip: Compare the rate, processing fee, prepayment terms and total interest. Do not choose by EMI alone.
Related: EMI (Equated Monthly Instalment) Loan-to-Value (LTV) Mortgage
The maximum loan a lender is willing to give, worked out from income, existing debts, age, job stability, credit score and the property's value. The bank usually checks the repayment burden against income and the loan against the property price.
Example: Ravi earns ₹1.2 lakh a month but already pays a car EMI. The bank approves less than he asked for because his existing obligations eat into his repayment capacity.
Agent tip: Let clients run eligibility before they shop for flats. A budget based on a realistic sanction avoids heartbreak later.
Related: FOIR (Fixed Obligation to Income Ratio) Credit Score (CIBIL) Loan-to-Value (LTV)
Also called: Home Saver Loan, Offset Loan, Overdraft Home Loan
A home loan linked to a current-type account where the borrower can park spare money. Interest is charged only on the loan balance minus the amount parked, so idle savings reduce interest while staying available to withdraw.
Example: Sunil, a trader in Zirakpur, keeps ₹6 lakh of surplus cash in his overdraft account and pays interest only on the remaining loan balance.
Agent tip: Useful for clients with irregular or seasonal cash. Compare the higher rate that such products often carry and the minimum balance rules.
Related: Home Loan Prepayment Floating Interest Rate
A non-bank lender that specialises in home loans, regulated by the Reserve Bank of India.
Example: A buyer takes a loan from an HFC instead of a bank.
Agent tip: Compare the HFC's rate, charges and customer service with banks.
Also called: Pre-Approved Loan, Loan Pre-Approval
A lender's early indication that it is ready to lend a certain amount, based on the borrower's income and credit check but before the property has been legally and technically reviewed. It is not a final sanction and can be changed or withdrawn.
Example: Before visiting sites in Kharar, Simran gets an in-principle approval of ₹55 lakh, which tells her which projects she can seriously consider.
Agent tip: Present the approval to builders as proof of seriousness, but remind buyers that the final sanction depends on the property papers.
Also called: Rate Reset, Reset Date
The date on which a floating-rate loan is repriced to match the benchmark. At reset, the lender changes the rate, and then either the EMI or the remaining tenure adjusts. RBI expects lenders to explain the change and offer the borrower a choice.
Example: Mehul's loan resets every three months. When the rate rose, his bank stretched the tenure by 14 months instead of raising the EMI, and he asked to switch to a higher EMI.
Agent tip: Check the reset frequency and who decides between a longer tenure and a higher EMI. Ask for a statement after every reset.
Related: Floating Interest Rate EMI (Equated Monthly Instalment) Tenure
Also called: Spread, Lender's Margin
The fixed margin a lender adds to a benchmark rate to arrive at the home loan rate. The spread covers the lender's costs, risk and profit, and it often depends on the borrower's credit score, loan size and profession.
Example: Two buyers borrow from the same bank in Pune. One has a score above 780 and gets a lower spread, so her rate is lower than her neighbour's by a quarter of a percent.
Agent tip: Tell clients to ask for the spread in writing and to check whether it can be reduced later for a good repayment record.
Related: External Benchmark Lending Rate (EBLR) Credit Score (CIBIL) Floating Interest Rate
Also called: PMAY-U 2.0 ISS, PMAY Urban 2.0
The home-loan support part of the urban Pradhan Mantri Awas Yojana 2.0. It offers a government interest subsidy on a limited loan amount to eligible buyers from economically weaker, lower and middle income households, within house-price and income caps.
Legal basis: Guidelines of the Ministry of Housing and Urban Affairs for PMAY-Urban 2.0. The older CLSS stopped taking new beneficiaries earlier.
Example: Under the current guidelines a household with income up to ₹9 lakh buying a home worth up to ₹35 lakh may get a 4% subsidy on the first ₹8 lakh of the loan, released in instalments while the loan stays active.
Agent tip: Rules and cut-off dates change, so check the official portal and the lender before promising any subsidy to a client.
Related: Pradhan Mantri Awas Yojana (PMAY) Credit Linked Subsidy Scheme (CLSS) Affordable Housing
Also called: KFS
A standard one-page summary that a lender must give a retail borrower before the loan is taken, listing the amount, interest rate, all fees, charges, tenure, EMI and the annualised cost. It helps compare offers on equal terms.
Example: Two banks quote Jatin the same rate, but their key fact statements show different processing fees and insurance charges, so the real cost differs.
Agent tip: Collect the statement from each lender and compare the annual percentage rate, not just the headline rate.
Related: Annual Percentage Rate (APR) Processing Fee Home Loan
Also called: LRD
A loan against future rent from a leased commercial property. The lender advances money today based on rent payable under existing lease agreements, and the rent is routed to repay the loan.
Example: Owner of a Panchkula showroom with a ten-year lease to a retail chain gets a loan sized on the monthly rent receivable, which is paid straight to the bank.
Agent tip: The strength of the tenant and the length of the lock-in are what banks check first.
Related: Pre-Leased Property Loan Against Property (LAP) Debt Service Coverage Ratio (DSCR)
A right to hold property as security until a debt is paid.
Example: A bank has a lien on a flat until the loan is repaid.
Agent tip: A lien may not appear in the registrar's records. Ask the seller for confirmation from the lender.
A loan raised by mortgaging an existing property, used for business or personal needs rather than for buying the property itself.
Example: A shop owner mortgages his office to raise working capital.
Agent tip: LAP rates are usually higher than home loan rates.
Also called: Loan Closure Certificate, No Dues Letter
A document issued by the lender after a loan is fully repaid, confirming that nothing more is due. The lender must also return the original property documents and release its charge on the property within the time set by the RBI.
Legal basis: RBI directions require regulated lenders to return original documents within 30 days of full repayment, or pay compensation for delay.
Example: After the last EMI, Parveen collects the original papers from the bank and the closure letter, then asks the bank to update the charge record.
Agent tip: Collect the closure letter and check that the lender's charge is removed from the property and the central charge registry.
Related: No Dues Certificate CERSAI Foreclosure
The loan as a percentage of the property's value. RBI limits LTV for housing loans: up to 90% for loans up to ₹30 lakh, 80% for loans of ₹30 to ₹75 lakh and 75% above ₹75 lakh.
Example: On a ₹60 lakh flat with an LTV limit of 80%, the bank lends at most ₹48 lakh, and the buyer pays ₹12 lakh from own funds.
Agent tip: Plan the down payment using the LTV limit, not the sale price alone.
Related: Down Payment Margin Money Home Loan
The portion of the cost that a buyer must pay from own funds because the bank does not lend it.
Example: With an 80% LTV the margin money is 20% of the property value, plus stamp duty and other charges.
Agent tip: Remind buyers that margin money, stamp duty and fees are extra to the loan.
Related: Loan-to-Value (LTV) Down Payment
A benchmark lending rate computed by each bank from its funding costs. Older home loans are linked to MCLR. RERA also uses the State Bank of India's highest MCLR to set interest on delays.
Legal basis: In most state RERA rules, interest is the State Bank of India's highest marginal cost of lending rate plus 2% (read as an annual rate). A few states use the prime lending rate instead.
Example: If SBI's highest MCLR is 9% and the rule adds 2%, the RERA interest rate is 11% a year.
Agent tip: MCLR is a bank benchmark. It is not the same as the repo rate.
Related: SBI Highest MCLR Floating Interest Rate Delay Interest
Also called: MODT, Memorandum of Entry
A written memorandum that records the deposit of original property papers with a lender as security for a loan. It records the intention behind the deposit, and in some states it must carry stamp duty or be registered.
Legal basis: Section 58(f) of the Transfer of Property Act, 1882 recognises a mortgage by deposit of title deeds.
Example: Sandeep hands the original sale deed of his shop to the bank and signs a memorandum stating that the deposit secures his business loan.
Agent tip: Do not release original papers to a lender without a receipt listing every document.
Related: Equitable Mortgage Title Deed Mortgage
Also called: EMI Holiday, Repayment Holiday
A period during which the borrower pays no principal, and sometimes pays only interest or nothing at all. In construction finance it often lasts until the project is complete. It does not remove the interest, which keeps building up.
Example: A builder in Panchkula gets a 24-month moratorium on a construction loan, so repayments begin only after the building is expected to be ready.
Agent tip: A moratorium lowers the early burden but raises the total interest paid. Ask what happens to the unpaid interest.
Related: Pre-EMI Tenure Construction Finance
A transfer of an interest in specific property to secure a loan. The lender has a charge on the property until the loan is repaid.
Legal basis: Transfer of Property Act, 1882, Section 58.
Example: A bank holds the original sale deed as security for a home loan.
Agent tip: A property under mortgage cannot be freely sold. The bank's NOC is needed.
Related: Equitable Mortgage Mortgage Deed Lien
A financial company regulated by RBI that lends but does not hold bank deposits like a bank. Many give loans against property.
Example: A self-employed buyer borrows from an NBFC when a bank rejects the file.
Agent tip: NBFCs may lend where banks decline, often at higher rates.
Related: Housing Finance Company (HFC) Home Loan
A loan on which the borrower has stopped paying interest or instalments for 90 days or more. Banks may take recovery action once an account becomes an NPA.
Example: A builder's loan becomes an NPA after payments stop for three months, and the bank starts recovery.
Agent tip: Check whether a builder's project loan is an NPA. It signals financial stress.
Related: SARFAESI Act Insolvency
A home loan given by an Indian lender to a non-resident Indian to buy or build a residential property in India. Banks look at foreign income, employment abroad, and the repayment account, which is usually an NRE or NRO account.
Example: Arvind, working in Dubai, takes an NRI home loan to buy a flat in Zirakpur and pays EMIs from his NRE account.
Agent tip: Expect more paperwork, such as attested income proof and a local power of attorney or relative for signing. Start early.
Related: NRI (Non-Resident Indian) Special Power of Attorney (SPA) NRE and NRO Accounts
Also called: Land Purchase Loan, Plot Purchase Loan
A loan to buy a residential plot, usually offered at a smaller percentage of the plot price than a home loan for a flat. Banks may require the borrower to build within a stated period, and tax benefits differ from those of a home loan.
Example: Kavita buys a ₹40 lakh plot in New Chandigarh and the bank finances a smaller share than it would for an apartment of the same price.
Agent tip: Confirm the plot is in an approved layout. Banks refuse plots in unauthorised colonies.
Related: Plot Approved Layout Loan-to-Value (LTV)
Also called: Pradhan Mantri Awas Yojana - Gramin, PMAY-G
The rural housing scheme of the central government that gives financial help to eligible poor rural households to build a basic pucca house. Beneficiaries are identified through official surveys and the money goes directly to their bank accounts.
Legal basis: Implemented by the Ministry of Rural Development.
Example: A family living in a kacha house in a village near Rupnagar is on the official beneficiary list and receives assistance in stages as their house reaches plinth, lintel and completion.
Agent tip: Tell rural clients that this is not a loan for buying property in the market. Eligibility comes from the official list, not from an application to an agent.
Related: Pradhan Mantri Awas Yojana (PMAY) Pucca Construction Kacha Construction
The central government's housing scheme. PMAY-Urban 2.0, approved in 2024, aims at 1 crore urban houses with an interest subsidy for eligible households. PMAY-Gramin supports rural housing.
Example: A family with an annual income within the limit applies for the interest subsidy on a loan for its first home.
Agent tip: Eligibility, limits and deadlines change. Check the official portal before promising a subsidy.
Related: Affordable Housing Home Loan
Interest-only payments made on the amount disbursed during construction, before full EMIs begin.
Example: A buyer pays pre-EMI on ₹20 lakh disbursed for the first two stages of construction.
Agent tip: Explain that under a construction-linked plan, the bank disburses in stages.
Related: EMI (Equated Monthly Instalment) Construction-Linked Plan Subvention Scheme
Paying part or all of a loan before schedule. From 1 January 2026, RBI directions bar prepayment charges on floating-rate loans to individuals for non-business purposes.
Example: A borrower uses a bonus of ₹3 lakh to prepay part of the loan, which shortens the tenure.
Agent tip: Confirm the prepayment terms in the sanction letter and the current RBI directions, since some loan types differ.
Related: Tenure Home Loan Floating Interest Rate
A one-time charge by a lender for handling a loan application, usually a percentage of the loan.
Example: A bank charges 0.5% of the loan amount plus GST as processing fee.
Agent tip: Ask for any fee waivers and compare total costs.
Related: Home Loan Sanction Letter
Also called: Home Insurance, Building Insurance
Insurance that covers a building and its contents against damage from fire, flood, earthquake and similar risks. Banks often require it for the property they finance, and it differs from loan life insurance, which covers the borrower.
Example: After a short circuit damages the wiring in Rina's Sector 20 house, her building insurance pays part of the repair bill.
Agent tip: Insure for the rebuilding cost, not the market price of land plus building.
Related: Home Loan Insurance Mortgage Structural Stability Certificate
Also called: Policy Repo Rate
The rate at which the Reserve Bank of India lends short-term money to commercial banks. It is the central bank's main policy rate, and when it moves, home loan rates linked to it usually move too after the next reset date.
Example: After the RBI's monetary policy committee cut the repo rate, Gurpreet in Ludhiana saw the rate on his repo-linked home loan fall at the next quarterly reset.
Agent tip: Do not promise clients that a rate cut will automatically reach them. Ask the lender when the next reset falls and whether the spread has been fixed.
Related: Repo-Linked Lending Rate (RLLR) Reserve Bank of India (RBI) Floating Interest Rate
A home loan rate linked to the Reserve Bank of India's repo rate. RBI requires new floating-rate retail and small-business loans to follow an external benchmark since 1 October 2019.
Example: A bank sets the home loan rate at repo plus a fixed spread.
Agent tip: Ask about the spread, the reset date and any spread charge for existing borrowers.
Related: Floating Interest Rate MCLR (Marginal Cost of Funds based Lending Rate)
Also called: Separate Account (70% Rule), RERA Designated Account
The separate bank account in which a promoter must deposit 70% of the money collected from buyers for a project. The money may be used only for land and construction costs of that project, and withdrawals follow the percentage of work completed.
Legal basis: Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016.
Example: A developer in Mohali collects ₹10 crore from buyers and must place ₹7 crore in the project's separate account, drawing on it as an engineer, architect and chartered accountant certify progress.
Agent tip: Ask the promoter for the account details and the latest certified withdrawals. Mismatch between collections and construction is a warning sign.
Also called: Reserve Price (Auction)
The minimum price below which a lender will not sell a property in an auction. Bidders must offer at least this amount, and the lender sets it after valuing the property.
Example: A bank puts a mortgaged flat in Panchkula up for e-auction with a reserve price of ₹48 lakh, and the first bid must be at or above it.
Agent tip: Buyers at auction should check the reserve price, the earnest money deposit, and any dues on the property before bidding.
Related: Bank Auction Property SARFAESI Act Distress Sale Value
Also called: Reverse Mortgage Loan, RML
A loan for senior citizens, typically aged 60 or above, who own a house. Instead of paying EMIs, the borrower receives regular payments from the lender and keeps living in the house. The loan is repaid from the property's sale after the borrower's death or when they leave.
Example: Retired teacher Mohan Lal, 68, takes a reverse mortgage on his Zirakpur house and receives a monthly sum, while his children later decide whether to repay the loan or sell.
Agent tip: Explain that the loan balance grows with interest, so the heirs may inherit less. Heirs should be told the options in advance.
Related: Mortgage Senior Living Legal Heir Certificate
A law, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, that lets banks and financial institutions take possession of and sell mortgaged property after notice to a defaulting borrower, without going to court first.
Legal basis: Under Section 13(2), the borrower gets a notice of 60 days before the lender can act.
Example: A bank issues a 60-day notice to a defaulting borrower and later auctions the mortgaged shop.
Agent tip: Bank-auction properties can be bargains, but check the notice, the reserve price and any pending challenge.
Related: Bank Auction Property Foreclosure NPA (Non-Performing Asset)
Also called: SBI MCLR
The highest marginal cost of funds based lending rate of the State Bank of India at the time, used in state RERA rules as the base for interest that a promoter pays on delay or an allottee pays on default.
Legal basis: Most state RERA rules set interest at this rate plus 2%, read as an annual rate. The rule number and wording differ by state.
Example: A delay of one year on ₹60 lakh paid at 11% a year gives an interest claim of ₹6.6 lakh for that year.
Agent tip: Use the SBI rate in force on the date of calculation, not an older figure.
Related: MCLR (Marginal Cost of Funds based Lending Rate) Delay Interest Section 18 (RERA)
Also called: SARFAESI Demand Notice, 60-Day Notice
The first formal notice a secured lender sends under the SARFAESI Act after a loan turns into an NPA. It gives the borrower 60 days to pay the dues, failing which the lender can take possession of the secured property and sell it.
Legal basis: Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
Example: After eight missed instalments, a bank sends Gagandeep a notice listing the dues and giving him two months to clear them.
Agent tip: Never ignore the notice. A borrower can still settle or challenge before possession is taken.
Related: SARFAESI Act NPA (Non-Performing Asset) Debts Recovery Tribunal (DRT)
Also called: Mortgage-Backed Securities
The process of bundling many loans, such as home loans, and selling the right to their repayments to investors as securities. It lets lenders free up money to lend again, and spreads the risk across investors.
Example: A housing finance company in Pune pools thousands of home loans and sells their future repayments to institutional investors.
Agent tip: Your client's loan may be sold on, but the borrower's terms and the servicing contact normally stay the same unless told otherwise.
Related: Housing Finance Company (HFC) Mortgage National Housing Bank (NHB)
Also called: Step-Up EMI, Flexi EMI
A repayment plan in which the EMI starts low and rises at set intervals, matching the expectation that the borrower's income will grow. Early years cost less, but the loan takes longer to shrink and total interest is higher.
Example: Anjali, a young chartered accountant in Mohali, starts with a smaller EMI and increases it every year in line with her expected salary growth.
Agent tip: Compare the total interest against a plain EMI loan. A step-up plan only helps if income really grows as planned.
The period over which a loan is repaid. Longer tenure lowers the EMI but increases total interest.
Example: Choosing 25 years instead of 15 cuts the EMI but adds lakhs in interest.
Agent tip: Suggest that buyers prepay when they have spare cash.
Also called: Time-Linked Plan
A payment plan in which instalments fall due on fixed dates or months after booking, whatever the stage of construction. The buyer must pay on time even if the building is behind schedule.
Example: Under a time-linked plan, Dinesh must pay an instalment every six months from booking, whether the builder has reached the next floor or not.
Agent tip: Buyers should avoid this plan when the builder has a record of delay. Prefer a plan tied to construction stages.
Related: Construction-Linked Plan Payment Plan Delay Interest
An extra loan from the same lender on top of an existing home loan, for personal or home improvement use.
Example: A borrower takes a ₹5 lakh top-up for renovation.
Agent tip: Top-up loans have different rates and tax treatment from the main loan.
Related: Home Loan Loan Against Property (LAP)
An agreement among the buyer, the builder and the bank for loans on under-construction property. It sets how the bank pays the builder and what happens on default or cancellation.
Example: In a subvention scheme the tripartite agreement lets the builder pay pre-EMI to the bank.
Agent tip: Read the clauses on cancellation and refund before the buyer signs.
Related: Home Loan Subvention Scheme Disbursement
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