order to get a housing loan approved by a Housing Finance
Company, a NRI borrower is required to submit several
documents pertaining to the property. Financing a home through
housing finance companies carries a double advantage for
from making funding easier for the investor, the HFC examines
the documents before disbursing the loan, and certifies that
the papers are in order. Even though all liabilities are
eventually borne by the buyer, the process reassures him of
the credibility of the investment.
since NRIs are allowed to repay the loan in foreign currency,
the proceeds of the sale from the property are fully
repatriable, in case he wishes to dispose of it at a later
avail a loan, the following elements can be kept in
Indians planning to return home
servants stationed overseas on duty with the Indian missions
or deputed abroad by foreign Governments or international
are also granted for renovation of an existing property.
of Indian origin, however, are not extended housing loans by
housing finance companies.
Housing finance companies can cover up to 85% of the cost of
the residential property, with an upper limit of Rs.1 crore.
The capacity to repay determines the maximum that an NRI can
borrow, which in turn is determined by such factors as:
income, age, qualifications, work experience, number of
dependants, income of spouse, assets, liabilities, stability
and continuity of occupation, employment prospects in India,
and savings history.
per a circular issued by the RBI on 31st January, 2007, if the
loan is against the NRI's NRE and FCNR accounts, the maximum
loan amount cannot exceed Rs. 20 lakhs.
of Interest and other
Interest rates will range from 11.25% to 14.25% per annum, as
different finance companies have an independent structure
broadly guided by RBI directives.
Processing fee to be paid
on the loan varies between 1 and 2% of the loan amount,
depending on the financial institution.
The interest is generally paid on the reducing balance, i.e.
interest is paid only on the unpaid portion of the loan.
Individuals must check on the calculations - whether it is
being calculated on a monthly, quarterly or annual reducing
balance. A monthly reducing balance, wherein interest is
calculated every month is easier on the pocket, as the
principal becomes lower at monthly
shorter the period of the loan the higher the amount you pay
each month. So choose your repayment capacity, and then work
backwards to settle your payback period. To calculate your
payment plan your dealer wi11 calculate your total liability,
i.e. principal and interest, and then apportion it into EMI's
(Equated Monthly Installments). Processing fees and
administrative fees also have to be borne by the
amortization schedule is a helpful tool to keep track of the
loan amount, as it gives the reduced loan amount every month.
It also gives the breakup of every EMI towards repayment
interest and outstanding principal of the loan.
Generally loans are disbursed for a period of 3 to 10 years,
and NRIs can avail of time spans to suit their
Loans are repaid in Equal monthly installments (EMI)
comprising principal and interest Repayment starts from the
month following the month in which the loan was disbursed.
Pre-EMI interest is paid on the principal amount first, before
the EMI starts. NRIs can make EMI payments through post dated
cheques from their NRO account.
Payments for fees, charges,
and pre-EMI interest should be remitted from abroad through
normal banking channels or from the Non-Resident (External)
Account/Non-Resident (Ordinary) account in India.
can also be repaid by the borrower's close family through
their account in India by crediting the borrower's loan
account. Settlement of loan in foreign exchange is treated as
equivalent to foreign exchange received for purchase of
Guarantee for the
The residential property that is being purchased is mortgaged
to the financing institution, by submitting title deeds and
other collateral security as may be
The borrower can choose between a one-time disbursal of loan
and a series of instalments to suit the payment module of the
property one intends to buy. Either way, the loan can be
availed as soon as the documents are processed and the
individual has paid up his own contribution.
The NRI can repay the loan well ahead of schedule by
remittances from abroad through normal banking channels, the
Non-Resident (External) Account and/or Non-Resident (Ordinary)
Account in India. Most institutions do not levy a pre-payment
documents to avail a Housing Loan:
Employment/Residency related documents
Photo copies of:
contract (if the contract is in a language other than
English, an English translation of the same attested by the
Embassy/Employer should be attached).
card issued by current employers.
stamped on the passport.
Discharge Certificate (CDC) - (if applicable).
Bank Account Statement for the last four months.
3. Power of
for payments made for purchase of the dwelling unit.
of approved drawings of proposed
for sale/sale deed/detailed cost estimate from
Architect/Engineer for property to be
letter from the co-operative society/association of