Until a few years ago, only a few financial institutions sanctioned home loans to NRIs or non-resident Indians. Most reputable and reliable banks and NBFCs avoided doing business with NRIs, mainly due to the risks associated with doing business with non-resident individuals. However, the scenario has changed over the past few years. Today, almost every reputed bank and NBFC offers home loans to NRIs. However, there are a few things that one must know about these home loans.
To start with, while the latest home loan interest rates for NRI home loans have come down, they still tend to be slightly higher than the latest home loan interest rates for Indian citizens. Additionally, NRIs applying for a home loan are often required to grant power of attorney to someone they trust completely. The home loan process involves signing numerous documents, and it can be challenging for NRIs to remain in India throughout the entire application process. As a result, it is advisable to transfer power of attorney to a reliable individual who can handle these matters on their behalf. However, they must carefully choose the person to whom they are transferring their power of attorney. Additionally, all NRI loan applicants must also know that currency fluctuations will affect their loan EMIs, so it is best that they keep in mind this fact when budgeting their home loan. Deciding the right NRI home loan tenor is also crucial. Below we discuss why.
Why is it so Important to Select the Right NRI Home Loan Tenor?
Selecting the right home loan tenor is more important than you think. The tenor you choose will affect your home loan EMIs, the total interest you will pay on the loan, and the total cost of borrowing funds. A long repayment tenor will help you keep your loan EMIs affordable, even if you have opted for a high home loan amount or have secured the loan at high home loan interest rates. However, a long home loan tenor will also increase the total interest that you will pay on the loan and the total cost of borrowing funds, which in turn, could lead to diminished returns. On the other hand, a shorter loan tenor, while potentially making repayment more stressful due to higher EMIs, can also lower the overall borrowing cost, resulting in better returns on investment.
How should one choose the right NRI home loan tenor? The answer is straightforward: select a loan tenor that ensures your EMIs remain affordable while keeping the total interest payout within a reasonable range. This balance will help you manage both your monthly payments and the overall cost of the loan effectively. An NRI home loan calculator can help you figure out the most ideal combination of loan value and tenor for you. You can use the calculator to try out different combinations of loan value and tenor and see how each different combination will affect your EMIs and the total cost of borrowing funds. The home loan calculator is free to use. So, borrowers can use the calculator as many times as they want. In the end, they must go with the loan value and loan tenor combination that delivers them affordable EMIs or EMIs that they will be able to comfortably repay.
Final Words
NRI home loan borrowers must also know that they qualify for home loan top up and home loan balance transfers. A Home loan balance transfer is an important facility that lets loan borrowers transfer the remaining balance on their home loan account to another financial institution willing to refinance their loan on more profitable loan home loan terms. NRI Home loans are eligible for this facility.
However, one must keep in mind that a home loan balance transfer attracts a home loan balance transfer fee. Further, only those individuals qualify for this facility who meet the eligibility for home loan transfers. Home loan balance transfers can prove to be highly beneficial and also help you save money. However, one must always go for them after careful planning and only when one is yet to pay a significant portion of the total interest or during the early years of one’s repayment tenor. A home loan balance transfer calculator can be a useful tool in this process, helping you make informed decisions about transferring your loan for better loan terms.
