FAQ on home loans for NRIs (The information in this FAQ is extracted from HDFC's (Housing Development Finance Corporation Limited*) Brochure cum application form for home loans for NRIs.) Who is an NRI? What are the RBI (Reserve Bank of India) rules governing the grant of loans to NRIs? What kind of home loans can I get? What is the maximum amount I can borrow? How will HDFC decide the loan amount I am eligible for? When can I make an application? How do I make an application? What is the fee payable on application and when is it payable? What are the supporting documents to be submitted along with an application? Who can be co-applicants? What is the rate of interest that will be charged on my loan? What is the maximum period in which I can repay the loan? How do I repay the loan? What is the size of the EMI? What security will I have to provide? When can I take disbursement of the loan? In how many installments can the loan be disbursed? Do I have to pay any commitment charge? Can I repay my loan ahead of schedule? In what form can I make payments to HDFC? Does the Agreement for Sale have be registered? Are there any restrictions on transfer of immovable properties? Does the property have to be insured? Are these policies subject to change? Will HDFC finance persons of Indian origin holding foreign passports? Can I get a copy of HDFC's home loan application form online? How do I get in touch with HDFC? Who is an NRI (Non resident Indian)? Under the Foreign Exchange Regulation Act of 1973, Non-Resident Indians are those who come under any of the following categories: 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. 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. Government servants depute abroad on assignments with foreign Governments or regional/international agencies like the World Bank , International Monetary Fund (IMF), World Health Organisation (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP). Officials of State Governments and public sector undertaking deputed abroad on temporary assignments or posted to their branches or offices abroad. What are the RBI (Reserve Bank of India) rules governing the grant of loans to NRIs? Guidelines issued by the Reserve Bank of India for grant of housing loans to Non-Resident Indians: The Reserve Bank of India has issued certain guidelines for granting loans to Non-Resident Indians by HDFC. The guidelines are: The loan amount should not exceed 85% of the cost of the dwelling unit for loans upto and including Rs.15,00,000 and 50% of the cost of the dwelling unit for loans over Rs.15,00,000 and upto and including Rs.25,00,000. A minimum of 15% of the cost of the dwelling unit for loans upto and including Rs.15,00,000 and a minimum of 50% of the cost of the dwelling unit for loans over Rs. 15,00,000 and upto and including Rs.25,00,000 will have to be met by applicants from remittances from aboard through normal banking channels or from their Non-Resident (External )/(Ordinary) Account in India. The balance of own contribution, over and above as mentioned in 1 & 2, can be met by the applicants from remittances from abroad through normal banking channels, from their Non-Resident (External)/(Ordinary) Account in India or from their Non-Resident (Ordinary) Account in India. The Equated Monthly Instalments (EMIs) for repayment of the loan including all fees and charges levied by HDFC, should be remitted to HDFC , from abroad through normal banking channels or out of the Non-Resident (External )/(Ordinary) Account in India. What kind of home loans can I get? HDFC offers you loans for Homes - for buying or constructing your Home or even to extend your existing home . Your home could be a self-contained apartment, or even an independent single-family or multi-family bungalow or row house. What is the maximum amount I can borrow? You can avail of a maximum loan of Rs.25,00,000 subject to : The loan amount not exceeding 75% of the cost of the property, for loans up to and including Rs.15,00,000. The loan amount not exceeding 50% of the cost of the property for loans over Rs. 15,00,000 and upto and including Rs.25,00,000. How will HDFC decide the loan amount I am eligible for? Subject to the above, your repayment capacity as determined by HDFC will help decide how much you can borrow. Repayment capacity takes into consideration factors such as income, age, qualifications, work experience, number of dependents, spouse's income, assets, liabilities, stability and continuity of occupation, alternate employment prospects when you return to India and savings history. And, of course , HDFC 's main concern is to make sure you can comfortably repay the amount you borrow. When can I make an application? You can apply for a loan whilst you are working abroad, to plan for your return to India in the future . The application can be made at any time after you have decided to acquire/ construct a property, even if the property has not been selected or the construction has not commenced. How do I make an application? It's simple. Complete the application form attached to this brochure and submit it along with supporting documents at any HDFC office that is convenient to you. On receipt of the complete application form with the prescribed fee, HDFC will consider your application, make enquiries as it deems necessary and convey its decision to you. You can also appoint a Power of Attorney in India and the Power of Attorney should be executed as per the draft provided by HDFC . This draft is available at any HDFC office. What is the fee payable on application and when is it payable? A one time fee of 2% of the loan amount applied for is payable. For example: Loan applied for Fees Rs.1,00,000 Rs.2000 Rs.5,00,000 Rs.10,000 The fee is payable when the application form is submitted to HDFC. What are the supporting documents to be submitted along with an application? The following documents are to be submitted along with the application: Photo copies of: Employment contract (if the contract is in a language other than English, an English translation of the same attested by the Embassy/ Employer should be given). Latest salary slip. Receipts for payments made for purchase of dwelling unit. Latest Work permit. Identity card issued by current employers. Visa stamped on the passport. Continuous Discharge Certificate (CDC)- (if applicable). Copy of approved drawings of proposed construction/purchase/extension. Agreement for sale/sale deed/detailed cost estimate from Architect/Engineer for property to be purchased /constructed/extended. Allotment letter from the co-operative society/association of apartment owners. Power of attorney as per HDFC's draft. (Please take photocopies of all documents that are submitted to HDFC for your personal record.) Who can be co-applicants? Proposed owners of the property, in respect of which you are seeking financial assistance will have to be co-applicants. However, all co-applicants need not be co-owners. What is the rate of interest that will be charged on my loan? The current applicable rate of interest in respect of the total loan sanctioned is 16.50% per annum. Interest is calculated on annual rests. Principal repayments are credited at the end of HDFC's financial year. The effective rate of interest on a loan , for a term of 7 years is 1.30% p.a. higher than the corresponding rate of interest indicated above. While it will be an endeavour of HDFC to keep the interest rate constant over the duration of the loan, it reserves the right to vary the rate of interest prospectively at any time in response to changes in money market conditions or if a levy, tax on interest or any other charge or burden is imposed or levied by any government or authority. What is the maximum period in which I can repay the loan? The period of repayment of the loan is normally in the range of three to seven years. However, HDFC endeavours to determine the repayment period to suit your convenience. How do I repay the loan? You repay the loan in Equated Monthly Instalments (EMIs) comprising principal and interest. Repayment by way of EMI commences from the month following the month in which you take full disbursement. Pending final disbursement, you pay interest on the portion of the loan disbursed . This interest is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of commencement of EMI. EMI payments are to be made through post dated cheques from your Non-Resident (External) Account. What is the size of the EMI? The EMI is 1/12th the Equated Annual Installment. The size of the monthly installment comprising principal and interest depends on the quantum of the loan , the interest rate applicable and the term of the loan. A sample of various EMIs (rounded off) corresponding to different terms is given in the table below: EMI for a loan of Rs.1,00,000: Terms of loan (years) EMI 3 3750 5 2580 7 2100 What security will I have to provide? Security for the loan is a 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. Interim security may be required , if the property is under construction . Collateral or interim security could be assignment to HDFC of life Insurance policies, the surrender value of which is atleast equal to the loan amount , guarantees from sound and solvent guarantors, pledge of shares and such other investments that are acceptable to HDFC. Please do ensure that the title to the property is clear, marketable and free from encumbrance . To elaborate , there should not be any existing mortgage. loan or litigation which is likely to affect the title to the property adversely. When can I take disbursement of the loan? You can take disbursement of the loan after the property has been technically evaluated, all legal documentation has been completed and you have invested your own contribution in full. Own contribution is the total cost of the property less HDFC's loan. In how many instalments can the loan be disbursed? The loan will be disbursed in full or in suitable instalments (normally not exceeding three in number) taking into account the requirement of funds and progress of construction, as assessed by HDFC and not necessarily according to a builder's agreement. You are advisable in your own interest to enter into such agreements with builders whereby payment is dependent upon the progress of work and not on a time based schedule. Do I have to pay any commitment charge? A commitment charge of 1% per annum on the undrawn amount of the loan commencing six months from the date of the offer of the loan is payable by you. Can I repay my loan ahead of schedule? Yes. You can repay the loan ahead of schedule, by remittances from your Non-Resident (External ) Account . No early redemption charges are payable. In what form can I make payments to HDFC? Payments for fees, charges, and pre-EMI interest should be remitted to HDFC from abroad through normal banking channels or out of the Non-Resident (External) Account in India. EMI payments are to be made through post-dated cheques from your Non-Resident (External) Account. Does the Agreement for Sale have to be registered? In many states in India, the Agreement for Sale between the builder and purchaser is required by law to be registered. Your are advised, in your own interest to lodge the Agreement for registration within four months of the date of the Agreement at the office of the Sub-Registrar appointed by the State Government, under the Indian Registration Act, 1908. Are there any restrictions on transfer of immovable properties? In terms of Chapter XXC of the Income Tax Act, 1961, the Central Government has the first option to purchase certain immovable properties exceeding certain value and as such transactions covered by this Chapter can be proceeded with only after complying with the requirements prescribed therein. Does the property have to be insured? You will have to ensure that the property is duly and properly insured for fire and other appropriate hazards, as required by HDFC, during the tendency of the loan and to produce evidence there of to HDFC, each year and/or whenever called upon to do so. HDFC should be the beneficiary of the insurance policy. Are these policies subject to change? Yes, These policies will be reviewed periodically. Will HDFC finance persons of Indian origin holding foreign passports? As per current guidelines of the Reserve Bank of India persons of Indian origin holding foreign passports are not eligible for loans from HDFC. Can I get a copy of HDFC's home loan application form online? Yes. Please click this link to download a copy of the application form in Word for Windows (Ver 6.0) format. How do I get in touch with HDFC? The addresses of HDFC's Mumbai and Chennai offices are given below, in case you wish to get in touch with them for further information. HDFC (Housing Development Finance Corporation Limited), Raman House, 169 Backbay Reclamation, Mumbai 400 020, India. Ph.: 91 22 2820282, 91 22 2836255 Fax: 91 22 2046758, 91 22 2046834 Second Floor, ITC Centre, 759, Anna Salai, Chennai 600 002. Ph: 91 44 8553838, 91 44 8554986, 91 44 8553894 Fax: 91 44 8553372.