NRI Loans

An Indian Citizen who stays abroad for employment / carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organisation and officials deputed abroad by Central/State Governments and Public Sector undertakings on temporary assignments too treated as non- residents). Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens (NRIs).

1: What is the maximum amount I can borrow to buy a property?

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.

2: How much loan can I avail?

Your eligibility will be subjected to your repayment capacity. 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 your savings history.

3: What documents should one submit along with the application?

The documents to be submitted include:

  • Employment/Residency related documents:
  • Photocopies of:
  • 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).
  • Latest salary slip.
  • Latest work permit.
  • Identity card issued by current employers.
  • Visa stamped on the passport.
  • Continuous Discharge Certificate (CDC) - (if applicable).
  • Overseas Bank Account Statement for the last four months.
  • Property Related Documents:
  • Receipts for payments made for purchase of the dwelling unit.
  • Copy of approved drawings of proposed construction/purchase/extension.
  • Agreement for sale/sale deed/detailed cost estimate from Architect/Engineer for property to be purchased/constructed/extended.
  • Allotment letter from the co-operative society/association of apartment owners.
  • Power of attorney

4: Who can be a co-applicant?

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.

5: What is the rate of interest that will be charged on my loan?

The rate of interest will vary depending on the Institution and the market. Generally it is between 8-9% per annum.

6: what are the additional charges applicable?

Some institutions charge a processing fee at the time of applying for the loan. This will vary from 0.5% to 1% of the loan amount applied.

7: How is the interest calculated?

Interest calculation generally follows a system called reducing balance. That is every time interest is calculated afresh, you would be paying a part of the principal. So interest is calculated on the unpaid part.

However if the EMI calculations were 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. It is better to opt for monthly reducing balance for the same reason.

If you select a shorter period, your monthly payments will go up. You could decided on your payback period based on your repayment capacity. The lending institution will calculate your total liability, principal+ interest -- and then divide the figure into Equated Monthly Instalment's. There will be a onetime processing and administrative fees which will add about 2 percentage points to the cost of your loan.

8: What is the maximum number of years one can repay the loan?

The general repayment period is 3 - 10 years. However, this is upto the discretion of the banking institution.

9: How do one repay the loan?

You repay the loan in Equated Monthly Installments (EMIs) comprising principal and interest. Repayment by way of EMI starts from the month after the month in which you take full disbursement. EMI is payable every 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.

10: What is the usual size of the EMI?

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

11: To avail 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.

12: How does the disbursement of the loan work?

Disbursement of the loan starts after the property is appraised, all legal documentation completed and you have invested your own contribution in full. Own contribution is the total cost of the property less the loan amount availed.

13: How the loan is disbursed?

The loan is disbursed in full or in suitable installments depending on the requirement of funds or progress of the construction.

14: Is prepayment of the loan possible before schedule?

Yes. You can do prepayment, 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 have a pre-payment charge.

15: 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 are not possible.

NB: The above details are subject to change. Kindly refer to the respective bodies for complete and up-to-date information

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