How NRI Loans Are Different From Loans For Indians? Article

	1888 Articles Home \| Finance Articles \| Loans Articles	Loans RSS
How NRI loans are different from loans for Indians?

Loan option to buy home is open to the resident individuals as well as the non-resident Indians (NRIs). However, there are some basic differences in the terms and conditions applicable to the two types. To understand the difference, you have to have a detailed idea regarding both.

Author: Addi Vardhaman

Article Tools:

An Indian citizen who holds a valid Indian passport but stays abroad for employment or for a business purpose or on a vacation outside India or stays abroad under circumstances which indicates that he/she has an intention for an uncertain duration of stay are categorised as NRIs. To avail loans, the NRIs have to fulfil certain criteria.

Educational qualifications are taken into account when NRI loans are concerned. The NRI must be a graduate. However, the educational parameters are not applicable to the resident Indian borrowers. The loan applicant should earn a minimum monthly income of 2,000 US dollar. The income criterion differs from banks to banks. In case of NRI loans to buy home,the loan amount does not exceed 85 per cent of the cost of property. However, in case of the Indian residents, the banks generally lend up to 90 per cent of the cost of property. The maximum loan amount depends upon the repayment capacity of the borrower. Different banks have different maximum limits. For example, when HDFC offers loans of up to Rs. 1 crore, the maximum loan amount offered by SBI is 24 times the borrower’s net monthly income.

The repayment pattern has also some differences. The resident Indian borrower can repay the loan amount from his savings account. But the non-resident Indian is debarred from that opportunity. He has to pay the monthly installments through his non-resident-external (NRE)/ non-resident-ordinary (NRO) account. However there is no disparity when the NRI loan interest rates and the rates payable by the residents are concerned. there is difference in the repayment tenure as the NRI has to repay the loan amount within 15 years. in case of resident Indians this tenure can be extended up to 20 years. To avail these loans the NRIs have to put some extra efforts on paperwork. The NRI loan applicant has to submit a copy of the passport and a copy of the works contract (also sometimes referred to as the contract card/labour card) at the time of loan application. These documents are are required only for NRI loans.

The NRI loan applicant also has to submit property-related documents including original title deed. He has to offer the title of the property for a minimum period of the last 13 years,encumbrance certificate of the property for the last 13 years and the agreement of sale/construction. the loan facilities vary from bank to bank/ The realty dealer and bank tie up has lead to the increase of the loan amount. For example, ICICI Bank provides loan amount of 100 per cent of the cost of the property if the property is bought from any of the builders with whom the bank has tie up.
However, this offer is limited to specific projects and is only for commercial real estate purchase.

Many of the Indian banks have now tied up with service associates in Kuwait, Oman, Saudi Arabia and Qatar, and have their presence in Dubai real estate market. These abroad offices offer advisory services in real estate and real estate financing to NRIs at the gulf counties interested to acquire homes in India. However the entire loan processing is coordinated in India. Some banks provide margin money in the country where the NRI resides if the borrower is not physically present in India to carry out the formalities of the loan.

About Author

For more information about NRI loans and home loans. Please visit our website: http://www.paisawaisa.com/

Article Source: http://www.1888articles.com/author-addi-vardhaman-9795.html

How NRI loans are different from loans for Indians?