By principal, we mean someone or something or a region which is the first in the list or any order of priority. It also means the original amount which is invested in something or lent. It also means the senior-most or most important individual in any company. It also means any amount on which interest is payable by the borrower.
Principal usually refers to the original amount/sum that is invested in something or lent/borrowed. It may also indicate any bond’s face value, a private entity owner, and any chief individual/participant in any transaction. The term has various meanings in the world of business and financial transactions. It could either be the original sum committed towards any investment in assets, or the original sum borrowed/lent. Principals in companies are those who have majority ownership shares in their businesses. Principals are also chief authorities for transactions and contracts.
By principal, we mean the following things in real estate-
1. The original sum of money lent to a borrower. This is the principal amount of the home loan. The borrower has to pay interest on this sum that he/she has borrowed, at a fixed rate of interest. The monthly EMIs also cover a portion of the repayment for the principal amount, along with interest.
2. The principal is also one who entrusts an agent to take actions on his/her behalf without any conflicts of interest. The relationship between the agent and principal is known as the agency.
3. The principal amount could also mean the sum that is being committed/risked in any investment in real estate.
4. It could also mean the owner of any real estate business, holding majority ownership in the same.
