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| How Can a NRI opt for a Home Loan In India? Posted: 15 Jan 2014 12:42 AM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Don't you know how important a roof over your head is? This need is felt more so in a foreign country .One doesn't know when and under what circumstances one would return to one's country. Haven't you read of the Nitaqat? .This is a system set up by the Saudi Arabian Government for localization of jobs. Would you ever want to be forced out of the country you reside in and find yourself in a situation where you have no roof over your head? .Definitely Not. Then it is time to make use of that foreign currency and take a home loan so that you can get that quintessential Home. Home Is Where The Heart Belongs
What Is The Eligibility Criteria Necessary For The NRI To Qualify For A Home Loan In India?
· The NRI loan applicant has to be at least 21 years of age.
· The NRI loan seeker has to be a graduate to apply for a home loan. He has to have a minimum of three years of employment abroad or a professional qualification with one year of employment abroad.
· The loan applicant has to have a minimum yearly Income between $30000 to $42000 if he is in the USA and a minimum salary of 36000 Dirham's a year if he works in West Asia for loans with a tenor of five years and an amount of 48000 Dirham's per year if the loan tenor is between 6-10 years. This also depends on how stable the NRI's job is and how long he can procure steady employment.
· The NRI has to route his EMI payments through his NRE/NRO Accounts and he cannot use any other accounts.
· The eligibility criteria also depends on the number of dependents, the amount of assets he possesses and his major liabilities.
· An NRI is eligible to take a home loan of INR 5 Lakhs up to a maximum of INR 1 Crore. The maximum amount of loan sanctioned can go up to 5 Crores. This mainly depends on what the repayment capabilities of the NRI are and how costly the land is. The NRI can avail a loan of up to 75% of the cost of the land, or a maximum of 85% of the cost of the property or 85% of the cost of construction of the house albeit at a different tenure from the Resident Indians.
· The rate of interest offered for the NRI can be 25-50 basis points higher than those offered to resident Indians generally to cover the higher risk involved.
· While an Indian resident can avail loans with a maximum tenor of 30 years with some banks the tenor for the NRI's is restricted to about 5-15 years. Their tenor is generally lesser as they are seen to be capable of repayment much faster than a normal resident Indian.
· The repayment of Monthly Equated Installments (EMI) can only be payed through NRE/NRO Account with remittances from abroad. The repayment needs to be done in Indian Rupees.
· The down payment is made through normal banking channels or through NRE/NRO Accounts in India.
· The loan is taken against property and if it is not repaid the bank can seize the property. This keeps bad loans with regard to NRI's low. The person could disappear but since the property is in India the bank can seize it.
· Always check to see if the bank charges a prepayment penalty or not. Some banks charge 2 % on the outstanding amount and whatever has been prepaid in the last 12 months for loans taken on fixed rates.
· You don't have to wait for the next trip to India. Most of the banks have branches in Dubai, Singapore and London where you can apply for home loans. Certain major banks also have an online submission facility.
List of Documents Required In Order To Procure A Home Loan For A Salaried NRI
· Copy of a valid passport with a stamped visa.
· A valid work permit for the country he works in.
· Overseas bank account for the last 3 months showing the salary credited.
· The salary certificates and the wage slips.
· Salary certificate attested by the embassy if the salary is not credited to a bank.
· Statements of NRO/NRE accounts are usually required.
List of Documents Required In Order To Procure A Home Loan For A Self Employed NRI
· Copy of a valid passport with a stamped visa.
· The business license or an equivalent document.
· Overseas bank account statements for the last 6 months of the NRE/NRO Account.
· Profit and Loss Account and the Balance Sheet for the last 3 years approved by a chartered accountant.
· Local address proof and the power of attorney to someone in India.
Other Documents Necessary In Order To Procure The Home Loan By The NRI
· Original title deeds tracing the property for the last thirteen years.
· Agreement of sale/construction.
· Encumbrance certificate for the last 13 years.
· Receipts for payments made for the purchase of the dwelling units.
· Allotment letter from the cooperative society.
· Latest tax paid receipt.
Loan Repayment Options Available For An NRI
Step Up Repayment Facility
In this option an NRI borrower can apply for a higher quantum of loan. The repayment rates are adjusted such that the EMI rates are lesser in the initial years and are gradually stepped up with time.
Tranche Based EMI
It is a special facility offered to NRI's when they purchase an under construction property .They need to pay interest till the property is ready. Here the NRI can fix the installments they wish to pay till the property is ready. The minimum amount payable is the interest on the loan amounts drawn. Anything above the interest paid goes towards principal repayments.
Accelerated Repayment Scheme
Accelerated repayment scheme for NRI's offers a great opportunity to repay the loans faster by increasing the EMI. This basically means faster loan repayment .Here you save on interest because of faster loan repayment .An NRI can also opt for repayment of loans ahead of schedule through remittances from his NRE/NRO Account.
Taxation of Home Loans of NRI's In India
· NRI's cannot claim tax benefits in India as they have to pay tax in the nation where they work or earn.
· You need to file tax returns in India to be eligible for home loans. Only if you pay tax for income earned in India can you claim tax rebate for the home loan.
"No Loan Is Free. The Costs Are Enclosed Somewhere. It Might Even Be Coming At A Higher Interest Rate. The Devil Is In the Details".
Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
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| Posted: 14 Jan 2014 10:53 PM PST Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Here we have the famous saying "Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy". We are a nation with a rapidly rising population. However our landmass remains constant .How do we provide for the residences and shelter for so large a number of people. The answer is real estate development and urban planning."Landlords Grow Rich In Their Sleep". We all know what this means. Here we need to follow a very clever approach .Buy land on the fringe of a developing city and wait .Buy land when other people want to sell. Buy and hold land. Isn't It A Comfortable Feeling Standing On Your Own Ground? .This One Thing Won't Fly Away". There are very few things in life which can give the peace of mind that possession of land gives.
Rise For The Time Is Now:
Rising…Rising…. the land prices are rising .Real estate is so expensive. Its affordability is beyond me. Oh I should have bought land back then. It is too costly now. The price of that dream house is beyond my budget .How many times have you heard these words .However one thought should certainly catch your attention. If land is priced stratospherically high now what would be its price tomorrow. Would you be able to afford it then…So make up your mind right now. The time is here…. the time is now…It is no use crying over spilt milk….Make that decision…Buy that piece of land or that dream home you always wanted…
Pricey Real Estate:-
India's real estate prices rose rapidly during the period of 2002-2007.This was categorized by a fall in the home loan rates, rapid development of infrastructure and supporting roads, bridges and rapid urban planning lead to the development of software parks in Bangalore and Hyderabad which lead to development of real estate and rapidly rising prices. Here the cities of Delhi and National Capital Region hold the highest potential for growth and development in the country. Here you would have noticed a number of real estate projects taking off in Noida and Faridabad. Here these projects focus on affordability. Small Is Big….Here a large number of affordable 1 BHK projects are being launched and rapidly lapped up in these regions. In a single year from 2010-2011 we noticed over 30% increase in prices in the NCR-Delhi regions. Can You Tell Me Any Other Class Of Assets That Can Appreciate So Much? The NCR region with its rapid pace of development and job opportunities is tapping affordable housing. A certain developer launched 1 Lakh affordable houses in the National Capital Region. Clearly Small Is Here To Stay.
City Of Dreams:
Yes I mean the great city of Mumbai. This in the last 10 years has become a city of the rich .Affordability within the city limits is out of question for most of the population. Yes Mumbai has become a city of the rich. Here an investment in Lakhs has become an investment in Crores. Clearly nothing can beat such a rise in appreciation Here a flat in the Mumbai Metropolitan Region which was costing about 30 Lakhs goes for about 1 Crore. Mumbai is clearly a city of the rich. Here foreign inflows have made realty unaffordable for locals .Post 2006 most of the houses have been lapped up by HNI's and NRI's. Here in a single year we noticed an appreciation in residential housing prices in certain areas at an whooping 40% Year on Year increase.
· Here the developers state that high land prices and development costs are to blame for such a wild price increase. Here the developers are hand in glove with the politicians. We may have read about the Adarsh Housing Society scam. Here the developers launch highly priced projects blessed with extra FSI from the politicians which has lead the city to accept as a foregone conclusion such highly priced land.
· Here the greed for high profits has led developers to turn a blind eye towards affordable housing. Until the developer gets his price he will not sell. This has led to large piling up of unsold inventory.
· Mumbai is a city of investments and clearly real estate is its prime investment. People from states such as Gujarat purchase flats and lock them up. They sell them years later at a phenomenal profit.
Mumbai's Satellite City:
· Navi Mumbai was a city planned and developed with an idea to de congest Mumbai and raise a city built on affordable housing. This was an incentive to attract working professionals to the city by providing affordable housing.
· Here areas like Vashi, Belapur, Kharghar, and Airoli have seen prices appreciate almost 5 fold in the last 5 years.In areas such as Vashi apartments are selling for over a crore for 2 BHK apartments. This is because businessmen and NRI's purchase and lock up these flats and sell them at a profit.
India's Garden City And Silicon Valley:
· Here just like in any other city the prices in the outskirts of Bangalore have risen more rapidly than the central business districts which is basically an inner city.
· Here the outskirts include Sarjapur , Hoskote and Devanahalli areas including the airport areas.
· Here in the early 1990's Koramangala was considered to be on the outskirts of the city. The price of land then was 300 per sq ft. Koramangala in the year 2000 became a CBD and its price increased close to 2000 per sq ft. Currently its rate is close to 12000 per sq ft. Isn't this an unimaginably high appreciation.
· Here we have the HSR Layout who's price hovered around 600 per sq ft in 2000.These were the outskirt areas. Now the price in 2012 for land at the HSR Layout is around 8000 per sq ft.
· Here we have Sarjapur where the land prices hovered from 300 per sq ft about a decade ago to around 2500 per sq ft last year. Quite an appreciation..
· Clearly we need to concentrate on the outskirts. Clearly areas such as HSR Layout, Sarjapur and Devanahalli need to be watched. If we invest in land and flats in the outskirt areas in Bangalore we have a chance to earn a high Return on Investments.
Please Tell Me About Some Real Estate I can Afford In These Cities
· Here a proposed metro rail will connect Noida with New Delhi. This improves connectivity with Noida Extension.In the NCR the Noida Extension provides for affordable housing with a chance of property appreciation of about 20% in the next 5 years. About 40 Kms from South East Delhi we have Greater Noida. Excellent connectivity is present between Noida and Greater Noida. The Yamuna expressway connects it to Agra. A metro will connect it to Delhi. This is the upcoming educational and industrial region and one can expect a property appreciation of around 25% in a year.
· The area of Chembur in Mumbai is poised for rapid development owing to its proximity to Bandra Kurla Complex a huge business area with lot of top Companies shifting base from Nariman Point owing to cheaper leasing and Commercial Real Estate prices in this area. The Santacruz-Chembur link road and Wadala-Chembur monorail improve connectivity. The same benefits would help Wadala as well.
· The Bangalore airport and its tag as an IT hub benefit Hebbal and areas close to it. New monorail and Namma Metro will boost its connectivity It has good infrastructure to support residential growth.
· K R Puram's proximity to Whitefield will improve its value. It is 3 Kms away from the metro station and the widening of the Old Madras Road and Peripherical ring road will improve connectivity.
Gold And Its Rise In Value In The last 5 Years:
· Here in the year 2000 we had the price of gold coins basically of 10 g at about INR 4500.This was followed by a price increase of INR 7000 in the year 2005.Here the gold coins value was between INR 10000 to INR 12000 in the year 2007-2008.The value hit an all time high of around 32000 per 10 g in 2012 and currently hovers around 28000 per 10 g in the year 2013.
· Here if you had invested 1 Lakh in gold in 2008 it would have a value of over 2 Lakhs in the year 2011.This is more than double or an increase of 100% in value in 3 years. Clearly a phenomenal rise in appreciation. Here India saw a staggering appreciation of 111% in a 3 year time frame mainly because of the falling rupee value.
· Over a period from the year 2011-2012 gold gave a return of over 30 % the only asset class which gave such returns when compared to equities after adjusting for inflation. However gold gave a return of around 7.5% in the year 2012.
· Currently gold prices are on a downward spiral with gold hitting an 18 month low in the month of April 2013.This means that gold currently is giving negative returns when we compare with the last year.
Crux Of The Topic: Gold Or Real Estate:
· Real Estate has capital appreciation in the long run along with a sense of ownership. We have all heard the saying "There's No Place Like Home". Gold is a good investment but Real estate is the real investment. Gold requires storage charges if it is not in the form of an ETF but we can always buy a second home lock it up and sell it once its price appreciates.
· Gold has given stupendous returns mainly in the period of 2008-2011.However real estate in the metro's such as NCR, Mumbai and Delhi have also risen at meteoric levels. Besides one can always earn steady rental amounts.
I would like to end this article with the conclusion that both gold and real estate have their uses albeit in different conditions." Gold Is A Hedge Against Inflation". Real Estate in Metro's provides higher returns with the present trend being sachet marketing where the land prices remain same but the size of the house decreases. With vast unsold inventory particularly in Mumbai this sachet marketing technique can prove to be a big hit. Here we have a saying "Grass Is Always Greener On The Other Side". Here it is too close to call between gold and real estate and one should invest depending on one's needs
Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
|
| Posted: 14 Jan 2014 09:31 PM PST Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Leave a missed Call on 94 8300 8300 You can save tax by investing in instruments that qualify for tax deductions
For further information on the topic you can CONTACT Prajna Capital on 94 8300 8300 by leaving a missed call.
We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
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