Realty growth felling the growth of NRI loans

Summary: NRI loans are in huge demand due to the increased propensity of NRIs to invest in Indian realty market. These loans are now available at a competitive rate and borrower friendly term.

Taking a loan to buy house or property in India has become relatively simple for an NRI /PIO. Any Indian who has been living abroad for employment, conducting business or pursuing a vocation with no intention to settle there are known as the non resident Indians. According to RBI guidelines they are eligible to avail the required finance to own property in India. Government officials deputed abroad on short term or long term assignments, Indian professionals with foreign governments or international agencies are also eligible to avail these loans.

After the instruction of RBI, loans are being offered to NRIs by leading financial institutions and commercial banks in India like Citibank, ABN AMRO, and SBI,etc. As an NRI you can opt for these loans. Apart from the banks you can also opt for the government supported 'Griha Shobha' scheme . An NRI can avail of a loan of up to Rs.1 crore or an amount of up to 85% of the cost of the immovable property. The NRI loan interest rate vary from 11.25% to 14.25% per annum and it may change according to the situations of the money market. Almost all banks and financial institutions charge a processing fee for these loans. This fee is payable once and amounts to approximately 1% to 2% of the loan amount.

The NRI loan interest rates and the amount of loan depend upon the individual's repayment capacity. The calculation of repayment capacity is done by the financial institutions by taking the factors like monthly and annual income in to mind. The source of income, savings and credit history, work experience, age, qualifications, number of dependants, other sources of income including spouse's income, and assets and liabilities also play a vital role to decide the NRI loan interest rates. Further, at the time of NRI loans approval, the probability of the business done by the individual, his/her interest in alternate employment prospects when he/she comes back to India is also assessed.

The tenure of repayment of the NRI loans is three to ten years. The repayments are usually made in easy Equated Monthly installments (EMIs). The EMI is a combination of the principal and interest amounts. EMIs starts deducting from the month following the month in which the loan gets disbursed. The payment of the EMI is made through post-dated checks from the NRE/NRNR account held by the NRI in India. Getting a home loan for an NRI or PIO is relatively easier compared the resident ones because their earning capacity is much more and they are mostly skilled professionals. their intention of borrowing is to invest even in high-end luxury property that may run into crores.

The repayment pattern of NRI loans is different from the loans sanctioned to the resident Indians. The resident of India can repay the loan amount from their savings account but an NRI does not have such privilege. He needs to pay his monthly installments through his non-resident-external (NRE) or non-resident-ordinary (NRO) account only. The repayment tenure of NRI loans is lower compared to the the loans open for resident Indians.

The interest calculation, of course holds the key to the cost of NRI loans . The uniformly followed system applied while calculating the interest rate is known as reducing balance. That is every time interest is calculated afresh, the loan applicant is assumed to have paid up a part of the principal. So interest is calculated on the unpaid part of the loan amount. Therefore the borrower should check check whether the interest is being calculated on a monthly, quarterly or annual reducing balance.

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