WHO
IS AN NON RESIDENT INDIAN ?
Under
the Foreign Exchange Regulation Act of
1973, on-Resident Indians are:
a.
Indian citizens
who stay 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.
b.
Government servants who are posted
abroad on duty with the Indian missions
and similar other agencies set up abroad
by the Government of India where the
officials draw their salaries out of
Government resources.
c.
Government servants deputed abroad
on assignments with foreign Governments
or regional/international agencies
like the World Bank, International
Monetary Fund (IMF), World Health Organization
(WHO), Economic and Social Commission
for Asia and the Pacific (ESCAP).
WHAT
ARE RBI GUIDLINES ON LOANS TO NRI'S?
The Reserve Bank of India (RBI) has issued certain guidelines
for granting loans to Non-Resident Indians. The guidelines are:
The loan amount shall not exceed 85% of the cost of the dwelling
unit. Own contribution, which is the cost of dwelling unit financed
less the loan amount, can be met from direct remittances from
abroad only through normal banking channels, your Non-Resident
(External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR
(O)] account and /or Non-Resident Special Rupee account [NRSR]
in India. Repayment of the loan, comprising of the principal
and interest including all the charges are to be remitted from
abroad only through normal banking channels, your Non-Resident
(External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR
(O)] account and /or Non-Resident Special Rupee account [NRSR]
in India.
FOR
WHAT PURPOSES ARE LOANS AVAILABLE TO NRI'S?
NRIs
can avail loan for buying or constructing
a new home, extending or improving
an existing home or even to buy a plot.
WHAT
IS MEANT BY "OWN CONTRIBUTION"?
HOW CAN THIS "OWN CONTRIBUTION BE
PAID"?
Own
Contribution is the cost of the dwelling
unit financed less the loan amount.
The own contribution should be met
from direct remittances from abroad
through normal banking channels or
from the Non-Resident (External) Account/Non-Resident
(Ordinary) or the Non-Resident Special
Rupee account in India.
WHAT
ARE THE COMMON DOCUMENTS TO BE SUBMITTED
ALONG WITH THE APPLICATION?
The
following documents are required along
with the application form: Photocopy
of the labour contract duly countersigned
by your employer (translated to English
for non-English documents). Latest
salary certificate (in English) specifying
the following: Name (as it appears
in the passport). Date of joining.
Passport Number. Designation. Perquisites
and salary. Photocopy of labour card/identity
card. Photocopy of valid resident visa
stamped on the passport. Photocopy
of monthly statement of local bank
account. Property related documents.
WHAT
SECURITY WILL NRI'S HAVE TO PROVIDE?
Typically
the security for the loan is 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. In addition
interim security may be required, if
the property is under construction.
Collateral or interim security could
be in the form of assignment of life
insurance policies, surrender value
of which is at least equal to the loan
amount, pledge of shares and such other
investments.
CAN
NRI'S GIVE A POWER OF ATTORNEY IN FAVOUR
OF A PERSON OF MY CHOICE IN INDIA TO COMPLETE
LOAN FORMALITIES ON MY BEHALF?
Yes.
Normally it is desirable to appoint
a Power of Attorney in India to represent
you in dealings in India. The Power
of Attorney should be executed as per
drafts provided by the housing finance
company. The Power of Attorney can
be given to any person of your choice
in India.
WHO
CAN AVAIL OF THESE LOANS?
According to the lending institution, any Indian resident who
is over 21 years of age at the beginning of the loan and below
65 at its maturity can avail of the loan.
WHAT
ARE HOME LOANS ?
These
are loans you have access to depending
on whether you
want
to buy or build a house and can also be
used to repair or extend an existing house.
WHY
SHOULD YOU OPT FOR A LOAN TO BUY A HOUSE?
Taking
a loan seems like a good option when
the money at hand is insufficient to
buy the house of your dreams. Consider
couples in their twenties and thirties.
They enjoy a good income currently,
but their accumulated capital isn't
enough to purchase a house. Whereas
a home loan can give them access to
capital against their current earnings.
Also, if you take a 10-year-old loan
when you are thirty, you could repay
it by the time you're forty. So you
don't have to be burdened with the
interest and are free to plan your
retirement savings.
WHAT
IS THE QUANTUM OF LOAN THAT YOU CAN AVAIL
OF?
Loan
sanctions depend on your repayment
capacity - which is based on your current
income and your future repayment capacity.
You could include your spouse's income
to enhance the loan amount. The maximum
loan that can be sanctioned varies
with each bank/institution and ranges
from Rs.10 lakhs to Rs.1 crore.
BUT
IS IT FEASIBLE TO TAKE SUCH A BIG LOAN?
A
home loan is very different from a
personal loan like a car loan for instance.
You utilize a home loan for financing
an asset that will hold its value and
even appreciate over the period of
the loan. Though its price could fluctuate
in the short term, Real Estate will
show capital appreciation over the
years.
HOW
DOES THAT BENEFIT ME?
The
value of your house generally appreciates
while the loan remains constant. If
you had opted to wait, save up and
buy a house, it would, in the long
run cost you much more. Home loans
also come with many tax benefits. There
are also More Factors to Consider other
than these. Do check them out.
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