Home loan for an NRI.

Staying away from the motherland can’t stop you from building a house of your dream. The home loan for NRI from the banks and other financial organizations can help people working abroad to invest money in buying properties in India. There are many public and private sector banks that have come up with the financial aid for the borrowers. The amount of money an NRI can avail as the loan amount depends on three main factors; the educational qualification, place or country of residence and gross monthly and net monthly income. The financial institute’s haveset a minimum criterion for earning based loan application.

The properties that are covered by the home loan for NRI scheme are of four types;the properties that are already constructed, under-construction property, properties that are to be constructed over pre-owned plots and existing properties, which requires change.

The NRI home loan tenure and the rate of interest differ from that of a residential home loan. Indians can get tenure up to 30years for repayment, but, an NRI’s tenure is restricted to five to twenty years. The tenure is based on the financial institution granting the loan and the loan amount. Some organization charges 0.25-.50% more on the base rate of interest as compared to a residential home loan. But, some banks punches the same rate of interest as the residential home loan of 8.7-9.2% in general and 8.65-9.15% for women borrowers. The borrower can select between adjustable/floating rate of interest and fixed rate of interest. The floating rate fluctuates depending on the market situation, but, the fixed rate doesn’t change. The borrower should ensure that no hidden charges are there.

Copies of passport, valid visa and permit for work, employment contract, work experience certificate, salary circulars and employment card are some of the required documents required for the application of home loan for NRI. If the NRI borrower wants a resident back home to do the document submission on his behalf, then the NRI has to grant that person a Power of Attorney, so that the resident can complete the process for him. The NRI borrower has to make the down-payment of 10-30% of the loan amount as margin money, rest is disbursed by the lending organization. The amount may change with different organizations. As a security the bank keeps the allotment letter of the lending property with itself, and returns it to the borrower, once, the loan amount is paid.NRI borrowers can also avail tax benefits under section 80C, Income Tax 1961.

For repaying the loan amount one has to possess a Non-resident external (NRE) or a Non-resident ordinary (NRO) account, and the payments can be done only in Indian rupees. During the repayment procedure, if the NRI borrower decides to become a resident of India, the various aspects of the loan; such as loan amount, tenure and rate of interest, all will change to residential home loan borrower. Some banks offer the borrowers the option to reduce the applicable rate through Conversion Facility. The NRI borrower can take the advantage of this facility by paying a nominal charge.

Like the residential home loan, the home loan for NRI also includes 1.25% of the loan amount plus the taxes as processing charges.

Though the procedure is common for all financial institutions, but, every organization can have slight variations in their mode of operation. It is best for the borrower to learn the variations before-hand, so that when the individual applies for the loan, the process is streamlined.

4 Useful Facts about NRI Home Loans You Must Not Miss.

Many Indians do reside abroad, earning a good income. Some of the non-resident-Indians (NRIs) may want to invest in Indian real estate property or simply wish to purchase a second home for themselves for future use. One reason to buy a house in India than the abroad is the cost difference. The property in India may cost lower than one in NRI’s current place of residence.

Even then, the non-resident-Indian may find it difficult to pay off the complete cost of the house he/she wants to purchase in India. In such a circumstance, the person can apply for NRI home loans to make up for the lack of finances. Some people think that NRIs cannot purchase a house in India, but that is not true. A lot many banks and financial institutes are willing to lend to NRIs.

However, the regulations and criteria for NRI Home Loans could differ from resident home loans in some ways:

1. Documents Needed: Documentation involved are a copy of visa, passport, address proof, and employment related details- appointment letter, salary slips, contract of employment. Except visa and passport, most of these documents also have to be produced by an Indian resident for a home loan.
2. Eligibility Criteria: The eligibility criteria for minimum years of work experience in abroad and minimum age can vary from a lender to another. Few banks allow lending for NRI home loans only if the person has at least 2 years of work experience abroad, while in few cases even a year’s employment is accepted. Some lenders can have a requirement for a minimum monthly salary drawn as well.
3.  EMI & Interest Rate: The EMI and interest rate or other charges for NRI home loans maybe same as that for resident Indians seeking a housing loan. The loan tenure could extend till 20 to 30 years, but in some circumstances, lenders may restrict it to just 10 to 15 years.
4. Loan Repayment: For NRI loan, repayment amount is accepted only in Indian rupees and not in the currency of the country where the NRI is living at. Repayments has to be made by remittances from abroad via non-resident rupee (NRE), normal banking channels, or a non-resident ordinary rupee account (NRO).

The above-mentioned factors are some of the important ones for NRI Home Loans. However, before your NRI friend or you as a non-resident -Indian approach a bank or lender for a housing loan, you must research about possible charges included as per NRI lending rules based on regulatory or political charges.

{Source: http://blog.loanbaba.com/4-useful-facts-about-nri-home-loans-you-must-not-miss/}

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Home Loans For NRIs.

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Home Loan for NRI Update

The Non-Resident Indians (NRIs) are recognized under the Foreign Exchange Regulatory Act, 1973 and defined as someone who is "An Indian citizen who holds a valid documents like Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI."

Documents required for Resident Indians as well as for NRIs for getting Home Loans are different in some respect. Home loan for NRI are available for construction of new house / flats, purchase of old house / flat addition / alteration to an existing house and repairs / renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfill certain conditions according to provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more.

The FDI Policy that permits FDI up to 100 percent from foreign/NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing NRIs finance plans with suitable repayment options are available.

Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.

The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The parameters include:

Age: The loan applicant has to be 21 years of age.

Qualification: The NRI loan seeker has to be a graduate.

Income: The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs). The eligibility is also determined by the stability and continuity of your employment or business.

Payment options: The NRI also has to route his EMI (Equated Monthly Installments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.

Number of dependants: The eligibility of the applicant is also determined by the number of dependents, assets and liabilities.

An NRI applicant is eligible to get a home loan ranging from a minimum of ` 5 lakh to a maximum of ` 2 crore, based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider. Also Home Loan Tenure for NRIs is different from Resident Indians. An applicant will be eligible for a maximum of 80 percent of the cost of the property or the cost of construction as applicable and 70 percent of the cost of land in case of purchase of land, based on the repayment capacity of the borrower.

However, a NRI can enhance his loan eligibility by applying for home loans with a co-applicant who has a separate source of income. Also, the rate of interest for home loan for NRI is higher than those offered to Resident Indians. The difference is to the extent of 0.25 percent-0.50 percent. Some HFCs also have an internally earmarked 'negative criterion' for NRI home loans. As such, the NRIs who hail from locations that are marked as being 'negative' in the books of HFCs, find it difficult to get a home loan.

The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittance from outside the country.

The repayment option for NRIs as they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time. As most of the home loan provider companies consider the economical stability of the applicant, home loan for NRI are quite feasible, because they are well in economic resource.

The repayment option for Non-Resident Indians (NRIs) is done in EMIs, and includes interest and principal amount calculated on monthly rests. The borrower can pay EMIs by issuing post-dated cheques from your Non Resident External (NRE)/Non-Resident Ordinary (NRO) or Non Resident (Special) Rupee Account (NRSR) in India; or any other 43account approved by the Reserve Bank of India (RBI).

In the case of part-disbursement of the loan, the monthly interest is payable only on the disbursed amount. EMI is payable every month, by the end of the month from the date of each disbursement up to the date of commencement of EMI. Pre-EMI is calculated at the same rate at which EMI is calculated.

The home loan tenure for Non-resident Indians differs from the Resident Indians on a few points, which may of course vary from one HFC to another. For most HFC the home loan tenure exceeds maximum from 25 to 30 years. However, for NRIs the maximum tenure is from 7 years up to 15 years. However, you cannot opt for a term that extends beyond your attaining retirement age or 60 years of age (whichever is earlier).

Tax benefits

NRIs cannot claim tax benefits on home loans in India as they have to pay tax in the nation where they work and earn. Moreover, you need to file tax returns to become eligible for home loans. However, if they pay tax in India for income earned in India, they can claim tax rebate for the home loan.

{Source: http://usefulone.blogspot.in/2012/09/home-loans-for-nri-update.html}