What is OCR in Home Loan?

Last month, while researching for a home loan, I came across the term OCR. Since I wasn’t of what it meant, I called a friend and asked him what is OCR in home loan. He told me that OCR in Home Loan means Outstanding Capital Remaining. According to him this refers to the principal amount that remains to be repaid on the home loan. He also added that the outstanding capital decreases with each time I make a payment.

What is OCR Proof for Home Loan Meaning?

After explaining the meaning of OCR he also told me about how it works. I have added a few points about the same below.

• Initial Loan Amount: The total amount borrowed from the lender.

• Monthly Payments: Each payment reduces the OCR, comprising both interest and principal.

• Principal Reduction: Over time, payments increasingly reduce the principal, decreasing OCR.

• Amortization: The loan balance reduces over the term, with OCR eventually reaching zero.

And that’s all he told me about what is OCR in home loan. I Hope this information has been of help to you. 

OCR amount in home loan is the term used to describe the remaining principal balance of any loan, including mortgage loans. OCR, as it relates to home loans, is the remaining balance of the initial loan principal that you owe the lender. 

How Does it Function?

The OCR full form in banking home loan is Outstanding principle Remaining. Now let us understand how it operates;

Initial loan sum: 

The lender gives you a specific amount of money to buy the property when you choose to take out a house loan. The principal on the loan is the initial amount.

Monthly Payments:

You contribute to your house loan each month. This payment usually comprises the amount that reduces the principal amount as well as the monthly interest charges.

Principal Reduction: 

The amount that goes toward the principal as you make these monthly payments contributes to a reduction in the OCR.

Amortisation: 

Your monthly payments will progressively change from being primarily hefty to being heavily interest-laden over time. This is because the interest calculation is altered as a result of the principal balance decreasing.

Loan term: 

The loan term and your monthly payment amount will determine how long it takes to repay the loan in full. The OCR becomes 0 after the loan term, signifying that the loan has been paid off, provided all payments have been made.

I hope this helps you understand the OCR meaning in home loan.

Read More:

Hello, I availed a home loan through Bajaj Finserv a year ago. During the process, I found out about a term called OCR, which is mainly a banking and home loan lingo. After contacting the officials, I enquired about the OCR full form in banking. They gave me a straightforward explanation for the same. Let me give you an insight into OCR.

OCR meaning in banking in India

In terms of home loans, OCR is referred to as Outstanding Capital Remaining. It can be understood as the remaining principal sum of a loan, consisting of a home loan. When we talk about home loans, OCR denotes the pending original loan principal, which a loan bearer still owes to the lender. Month by month, as you continue to pay towards your home loan, a part is designated for the OCR. 

What is OCR in real estate

OCR stands for Overall Capitalisation Rate in the real estate industry. It is a variable quantity which is a result of the division of a property’s net operating income by the property’s original value. This is used to assess the estimated rate of return on a real estate investment. It showcases the potential net operating income for a particular year and the complete value.

I hope you now know what is the meaning of OCR in banking.

I got to know about this concept when I opted for a home loan to buy a property. You will be required to contribute a portion of the property's value out of your personal wallet. It primarily indicates your initial financial investment in the home. OCR is the receipt you get when you make payment in the form of your own contribution apart from the loan. Let me further guide you on what is OCR in home loan here.

What is the meaning of the OCR in home loan?

Own Contribution (OC) is the amount of cash that you must pay to the developer or property reseller out of your personal wallet. After receiving payment, the developer or reseller will provide you with receipts. It is also referred to as margin money receipts (MMR) or own contribution receipts (OCR). By paying out of your own money, you not only lower the borrowing institution's risks but also establish your major investment in the home. As a result, the lender is forced to balance his liabilities and provide you with a home loan for the balance. This is all about the OCR proof for home loan.

What is the optimum OC-to-home loan ratio?

The total cost of your property determines the size of your individual contribution. Financial institutions typically additionally consider other elements. Such as the total loan length and the potential cost of dealing with other products in order to calculate the final personal amount due. Therefore, at greatest, you could receive a loan of Rs. 50 lakh for your property, which is worth Rs. 60 lakh. You will be required to make arrangements for the remaining sum from your own funds, deliver it straight to the seller, and obtain receipts for an extra payment.

The extra amount of own investment for home loans with values between Rs. 25 and 75 lakhs might be as low as 10% of the entire value of the property. The own demand rises to 25% for loans over Rs. 75 lakh. The Loan-to-Value Ratio is a metric that banks use to determine the maximum loan amount they will make (LTV). For houses priced below Rs. 20 lakh, between Rs. 20 and Rs. 75 lakh, and over Rs. 75 lakh, the LTV for home loans typically ranges between 90%, 80%, and 75%, accordingly.

You are now aware of what is OCR in home loan.