Purchasing your own home is a dream of many people. It is one of the essentials of good living. It is a massive financial decision and one needs to make sure that they invest in a good house. As much as it is important to know the location of the property, the developer whose project you are investing in, the inspection of property and amenities provided along with it, it is also important to know basic terminologies being used while making a purchase decision. Figures and terminology can be misleading and even deceiving occasionally. To make an informed decision, homebuyers need to understand and get acquainted with the property jargon used by developers. Until you begin the home buying process, getting a basic understanding of significant property terms will make the process easier now and may save you a lot in the future.
If you are new to the real estate market and want to buy a home but aren’t familiar with property terms and concepts related to property, you don’t need to worry about it as SBP Group is here to help you understand all the essentials terminologies before you make any buying decision.
You must have heard about different types of areas while looking for a property such as a carpet area or built-up area etc. These areas usually indicate the space available in the house. Following are the detailed information about different types of areas to clear out your confusions:
- Carpet area: This is the actual floor area measured from the walls’ inner faces. It means the portion of an apartment that can be carpeted and the balconies included.
- Built-up area: This refers to a flat’s total area. The carpet area, the room occupied by the thickness of the walls and ducts, is included. It is usually 10-15 percent greater than the area of the carpet.
- Super built-up area: This is the complete ‘saleable’ area, adding markup for open spaces like lifts, staircases, entrance lobby, halls, etc. over the built-up area. It includes all common facilities not specifically charged to the buyer (excluding parking space) but proportionately divided between all the flats. For the super built-up city, the unit price per square foot is paid.
Understanding these property terms for areas is important to know exactly how much area is available for you to stay in. Also, remember that developers are obligated to include/report the carpet area of all units in their brochures and websites. Paying attention to the space offered to you for a living is very important and helps you in making a purchase decision.
Besides that, as we know that buying a property involves a big financial decision and most people rely on home loans to purchase their desired property, you also need to understand financial terms involves with real estate:
- The Debt-to-Income Ratio (DTI) is a calculation of the debt repayment capacity of a borrower relative to his or her gross monthly income. In simple terms, the DTI is the gross percentage of all monthly debt payments, divided by the gross monthly revenue. It is a method used by financial institutions and lenders (including mortgage lenders) to estimate the ability of a borrower to make monthly loan payments and repay the total amount.
- The loan to value ratio or LTV, provided the market value of your land, is a ratio of the amount of loan that you will receive. Generally, the LTV for a property loan varies from 40 percent to 75 percent of the total value of your property. LTV for a Property Loan tells you the maximum amount of funding that you can get depending on the asset you are guaranteeing. The property is measured here on variables such as its kind: commercial or residential, and occupancy.
- Ready reckoner rate – This is the minimum amount at which a house has to be registered in the event of its transfer, it is also known as the circle rate. The declared transaction value or the minimum rate set by the government, whichever is higher, must be registered for a house. The stamp duty is measured as a percentage of such amount.
Knowing these financial terms will help you when you are applying for a loan as well as when you are finally making the purchase.
Another term which you need to know is “Inspection”, once you have decided on a property you want to invest in you need to make a home inspection. It is a visual and mechanical inspection of a home to detect defects and determine the condition of the home.
Once you have selected a house you want to buy, you need to make sure that every document related or required for purchase is with you. Some of the essential documents you should know about are as follows:
- No objection certificate: provided by the local authority stating that the building plans are in order and comply with the guidelines.
- Encumbrance certificate: provided by the Registrar of Assurances or the Sub-Registrar ‘s Office after proper verification of the relevant documents certifying that the property is free of all debts.
- Occupancy certificate: issued to the builder or owner of a house by the local municipal body indicating that it is suitable for occupancy, after ensuring that the building complies with all permissible building plans and local laws.
- Sale agreement: Contains a commitment to transfer the properties in the future, subject to certain terms and conditions. In itself, an agreement to sell does not establish any ownership interest in the property. Therefore, without a conveyance deed, the acquisition of a property is not complete.
- Sale deed/conveyance deed: A contract in which the rights of the property are transferred to the buyer by the seller, providing the buyer with full and unquestioned possession of the property.
For every homebuyer, it is essential to know about these documents and to verify whether the developers are complying with all the laws or not. Besides that, if you are interested in purchasing a property you need to know all these property terms and abbreviations used for it so that you can invest in your dream home without any worry.
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