Monday, May 21, 2012

Nri Home Loans: Fees, Interest Rates And Other Charges

Like other home loans, NRI home loans also have various fees, interest rates and other charges associated with them. The fees and extra charges levied on the home loan increase the cost and have to be accounted before hand.
Processing Fees
Banks and finance institutions often levy a processing fee, which is sometimes also called the administrative fee for NRI home loans. This fee has to be submitted with the application and is generally non-refundable. The processing fee is the first thing a home loan borrower will pay to the bank or HFC.
Usually the processing fee is around 0.5% to 1% of the loan amount. A good thing to ask the lender is whether the processing fee includes the service tax or not. Given the high service tax rates in India, a processing fee, which includes the service tax, comes as a pleasant surprise. Here are few examples:

SBI charges a processing fee of 0.5% (inclusive of service tax) for its NRI home loan.
ICICI Bank charges 1% of the loan amount in INR- Indian rupees as the processing or administrative fees. A service tax: 12.36% is also levied on this fee.

Interest Rates on NRI Home Loans
The interest rates on NRI home loans are on the higher side as compared to a regular home loan in India. Depending on the lender, loan tenure, loan amount and the assessment a lender makes about the loan applicant, the interest rates on NRI home loans can vary from 11.5 % to 16%.
In addition to the processing fees there are various other charges that can be levied on the NRI home loan. Some of these are listed below:
Valuation Charges:
These are charged by the lender to get the property valued.
Late payment penalty:
It is usually around 2% of the installment subject to a minimum and maximum limit.
Prepayment charges:
If you want to prepay your NRI home loan for any reason, the bank will ask for prepayment charges. The prepayment charges also vary from lender to lender. Usually around 2%, most lenders do not charge prepayment charges if they find that the borrower has prepaid the loan from his money. However, refinancing of a loan will definitely attract prepayment charges.
Cheque Bounce Charges:
As evident it is charged when a cheque bounces.
Cheque Swap Charges:
Levied when, the borrower wants to swap checks, which he initially gave to the bank with new ones.
Document retrieval charges:
It is charged when the borrower wants to get some documents pertaining to the NRI home loan from the lender.
In addition to the above charges there are stamp duties to be paid, which are charged as per the rates prevalent in the state where the property is located.

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