Real Estate Essentials: Understanding Key Terms for New Homebuyers

By Lodha

Have you ever found yourself in the stands of a game, surrounded by passionate fans, yet feeling utterly lost because you don't understand the rules or the play unfolding before you? If so, you can empathise with the experience of many first-time homebuyers.

For seasoned real estate agents, builders or buyers, the language of escrow, amortisation, and so on may roll off the tongue effortlessly. However, for those buying their first home, mention of unfamiliar real estate phrases can feel like being thrown into a game with unfamiliar rules.

Since buying a property is a significant investment, understanding these terms is crucial for making informed decisions and ensuring a smooth home-buying process. In this guide, we'll explore key real estate terms that every first-time homebuyer should know.

Real Estate Terms to Know: Your Essential Vocabulary Guide

Here’s a list of some common real estate terms and definitions that will help you navigate your first home-buying journey with confidence.

1. Commencement Certificate (CC)

One of the many abbreviations in real estate, a CC is an important approval for building construction that certifies that the builder has received all the official permissions and is authorized to begin work.

2. Cost Sheet

A basic real estate term, the cost sheet lists all the expenses involved in buying an apartment, including a breakdown of apartment costs and the payment schedule. It includes agreement value, stamp duty, registration fees, taxes, and other charges.

3. Occupancy Certificate (OC)

A must in your real estate vocabulary, this document certifies a building’s readiness for occupancy, confirming that construction complies with approved plans and regulations. It is essential for resale and ensures legal possession.

4. RERA

The Real Estate (Regulation and Development) Act of 2016 improves accountability, transparency, and efficiency in the real estate industry while protecting homebuyers’ interests.

5. Carpet Area

The term “carpet area” indicates the actual usable area within an apartment as measured from the inside walls. It covers the portion that can be carpeted and may extend to balconies.

6. Built-up Area

The built-up area includes the carpet area plus the wall and duct thickness. It is typically 10–15% larger than the carpet area.

7. Floor Space Index (FSI)

Essential to any real estate glossary, FSI is the ratio of a building’s floor area to the plot area. It regulates urban density and varies as per city-specific guidelines.

8. Pre-EMI

The pre-EMI is a payment plan where buyers pay only loan interest while the property is under construction. Regular EMIs covering principal and interest begin once possession is given.

9. Earnest Money

Often called a “good faith deposit,” earnest money is paid by a buyer to demonstrate commitment to the transaction. It’s held in escrow until completion or cancellation.

10. Escrow

Escrow is a process where a neutral third party holds funds or assets during a transaction, ensuring both parties meet all conditions before releasing the funds.

11. Fit-Out Possession

Fit-out possession allows buyers to take early possession of a property to carry out interior or civil works before final handover.

12. Preferred Location Cost (PLC)

PLC refers to the additional cost for units offering superior views or locations—such as park-facing or corner apartments.

13. Floor Rise Cost

A charge levied per square foot as the floor number increases in a high-rise building. Typically, higher floors incur higher costs.

14. Amortisation

Amortisation refers to the process of gradually paying off a loan over a defined tenure through scheduled EMIs that include both principal and interest.

15. Contingencies

A contingency is a condition in a property agreement that must be met for the contract to become binding. Examples include financing or inspection clauses.

16. Adjustable-Rate Mortgage (ARM)

An Adjustable-Rate Mortgage is a home loan where the interest rate fluctuates during the tenure based on market conditions. The rate may rise or fall at predetermined intervals, allowing flexibility but also some unpredictability in repayments.

17. As-Is

A property sold “as is” means the seller will not make repairs or modifications. The pricing is usually lower, reflecting its condition. However, the seller remains liable if damage occurs before handover, ensuring the property is delivered in the agreed condition.

18. Closing Costs

Closing costs are the additional charges buyers pay at the end of a property transaction. These typically include title insurance, taxes, and registration or documentation fees associated with finalising the purchase.

FAQs

1. During the home-purchasing process, what should you do first?

The first step is to assess your financial readiness. This includes determining your budget, checking loan eligibility, and getting a pre-approval for a home loan. Once finances are in order, you can shortlist preferred locations and begin comparing projects that meet your lifestyle and investment goals.

2. How much time does it take to purchase a house?

On average, purchasing a home in India can take anywhere from four to eight weeks. This depends on factors such as loan approval time, documentation, builder possession schedules, and registration procedures. Under-construction properties may extend this timeline based on the project’s completion stage.

Lodha: Guiding You Towards Informed Homeownership

At Lodha, we believe that homeownership should be a confident and fulfilling experience. Our team is committed to helping buyers make informed decisions at every stage—whether it’s understanding key terms, choosing the right property, or navigating financial planning.

From our luxury developments in South Mumbai to thoughtfully designed communities such as Lodha Upper Thane and Lodha Palava, every Lodha home reflects exceptional quality, transparency, and trust. Begin your journey towards a well-informed and rewarding homeownership experience with Lodha, India’s most trusted real estate brand.