Home Loans for NRIs

NRI's staying abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad are eligible for NRI Housing Loan. In addition, Government Servants posted abroad on duty with the Indian missions or deputed abroad on assignments with foreign Governments or regional/international agencies qualify for housing loans. However, persons of Indian origin, holding foreign passports are not eligible to obtain loans from Housing Finance Companies.

What is the maximum amount I can borrow?
You can avail of a maximum loan of Rs.1,00,00,000 or 85% of the cost of the property, including cost of the land, whichever is lower.

What is the loan amount I am eligible for?
Subject to the above, your repayment capacity will help decide how much you can borrow. Repayment capacity takes into consideration factors such as income, age, qualifications, work experience, number of dependants, spouse's income,assets, liabilities, stability and continuity of occupation, alternate employment prospects when you return to India and savings history.

What are the supporting documents to be submitted along with an application?
The following documents are to be submitted along with the application:
Employment/Residency related documents:
Photo copies of:
1. Employment contract (if the contract is in a language other than English, the English translation of the same attested by the Embassy/Employer should be given).
2 Latest salary slip.
3 Latest work permit
4 Identity card issued by current employers.
5 Visa stamped on the passport.
6 Continuous Discharge Certificate (CDC) - (if applicable).
7 Overseas Bank Account Statement for the last four months.
Property Related Documents:
1 Receipts for payments made for purchase of the dwelling unit.
2 Copy of approved drawings of proposed construction/purchase/extension.
3 Agreement for sale/sale deed/detailed cost estimate from Architect/Engineer for property to be purchased/constructed/extended.
4 Allotment letter from the co-operative society/association of apartment owners.

Power of attorney

Who can be co-applicants?
Proposed owners of the property, in respect of which you are seeking financial assistance will have to be co-applicants. However, all co-applicants need not be co-owners.

What is the rate of interest that will be charged on my loan?
The rate of interest will vary depending on the Institution.

What is fixed rate-housing loan?
In a fixed rate loan, the rate of interest is fixed and does not charge over the tenure of the loan.

What is a floating rate-housing loan?
In a floating rate loan, the interest rate varies in response to the general interest rate environment.

Which is too better option - Fixed or Floating?
Ideally a floating rate loan makes sense when interest rates are high. Borrowing at a floating rate will allow you to take advantage of falling interest rates in the fixture. Option for a fixed rate loan when rates are low, and there is little possibility of them falling further.

How is the interest calculated?
The interest calculation, of course holds the key to your cost . The uniformly followed system is to apply the interest rate at what is known as reducing balance. That iseverytime interest is calculated afresh, you are assumed to have paid up a part of the principal. So interest is calculated on the unpaid part.

Therefore you must check whether the interest is being calculated on a monthly, quarterly or annual reducing balance .The difference? Consider a Rs. 20 lakh loan repayable over 20 years at an EMI of Rs. 31,137 .Calculated monthly, the interest component of your loan turns out to be Rs. 30,000 for the first month, so your EMI actually pays off the entire interest for the month, and Rs.1,137 from the principal . Since the same calculations are made every month, the principal becomes lower it monthly intervals.

However if the EMI calculations was on an annual basis, the principal portion of your loan of Rs. 20 lakh would be reduced by Rs. 13,644 . But the interest calculation is done only once a year-that means the interest payment is a little higher . "The More often reducing balance is calculated the better you will be." So remember opt for the Monthly calculation whenever possible.

The shorter the period of the loan the higher the amount you pay each month. So pick your repayment capacity, and then work backwards to finalise your payback period . To calculate your payment plan your vendor will calculate your total liability, principal+ interest -- and then divide the figure into EMI's (Equated Monthly Instalment's). One off processing and administrative fees which will add about 2 percentage points to the cost of your loan will also have to be paid .

What is the maximum period in which I can repay the loan?
The period of repayment of the loan is normally in the range of three to 10 years. However the lender will endeavour to determine the repayment period to suit your convenience.

How do I repay the loan?
You repay the loan in Equated Monthly Instalments (EMIs) comprising principal and interest. Repayment by way of EMI commences from the month following the month in which you take full disbursement. EMI is payable every month, by the end of that month.

In respect of the period prior to commencement of EMI, you pay interest on the amount/s of the loan disbursed. This interest is called Pre-EMI interest. Pre-EMI interest is payable every month, by the end of the month, from the date of each disbursement upto the date of commencement of EMI. Pre-EMI is calculated at the same rate at which EMI is calculated.

EMI payments are to be made through post dated cheques from your NON-Resident (External) Account/Non-Resident (Ordinary) Account in India.

What is the size of the EMI?
The EMI is 1/12th the Equated Annual Instalment. The size of the monthly instalment comprising principal and interest depends on the quantum of the loan, the interest rate applicable and the term of the loan.

What security will I have to provide?
Security for the loan is a first mortgage of the property to be financed, normally by way of deposit of title deeds and/or such other collateral security as may be necessary.

When can I take disbursement of the loan?
You can take disbursement of the loan after the property has been technically appraised, all legal documentation has been completed and you have invested your own contribution in full. Own contribution is the total cost of the property less the loan amount availed.

In how many instalments can the loan be disbursed?
The loan will be disbursed in full or in suitable instalments taking into account the requirement of funds and progress of construction.

Can I repay my loan ahead of schedule?
Yes. You can repay the loan ahead of schedule, by remittances from abroad through normal banking channels, your Non-Resident (External) Account and/or Non-Resident (Ordinary) Account in India. Most of the institutions do not levy a pre-payment charge.

In what form can I make payments to the Housing Finance Institution (HFI) ?
Payments for fees, charges, and pre-EMI interest should be remitted to the HFI from abroad through normal banking channels or from the Non-Resident (External) Account/Non-Resident (Ordinary) account in India.
EMI payments are to be made through post dated cheques from your Non-Resident (External) Account/Non-Resident (Ordinary) Account. Cash payments will not be accepted.