Rules to Follow While Taking an NRI Loan Against Property

 Financial setbacks come unexpectedly and end up delaying our plans. And it is less probable that people have the funds ready to keep their life on track. Hence, NRI Loans Against Property come to the rescue where you can keep your property as collateral and avail the funds you need. Also called mortgage loans, LAP is secured loans and gets accredited in brief times, these are taken into consideration as one in all the most dependable methods.



However, there are certain rules you need to follow while availing an NRI Loan Against Property:

1. Calculate your loan amount as per your financial capability 

The borrowers are advised to calculate their repayment capacity and not a larger amount. This can be done by calculation of the EMIs on the loan amount. However, many financial organizations provide 50% to 90% of the property value as the final LAP amount but your NRI Loan Against Property shouldn’t exceed 65% of your net income.

2. Go for a shorter loan repayment tenure 

SBM Bank provides NRI Loans Against Property with a repayment period of up to 15 years. Choosing longer tenure seems a good option as it decreases the amount of EMI, but ultimately increases the payable interest. Hence, it is advised to keep your tenure shorter to release your property faster at the same time decreasing the payable interest. 

3. Punctuality while paying EMIs 

This is a very important rule; delay in EMI payment increases the overall cost of your borrowed amount. The late payment fees or penalties are charged on overdue EMI payments and your property comes under higher risk. Moreover, it might lead to mismanagement of your financial planning as the interest on the loan gets increased. It also affects your credit score which gets recorded in your credit report too. You can avoid all of this by being punctual in paying your EMIs. 

4. Avail of insurance while borrowing larger amounts 

LAPs or mortgage loans are assumed to be debts for the long term. And the higher the loan amount, the bigger the risk gets. Hence, it is strongly recommended to avail insurance to cover the borrowed amount in any case of an unfortunate event. These insurances come to aid in providing the required funds at the time of emergency to repay the loan EMIs and ultimately protecting the property from getting seized. 

5. Always read the terms and conditions carefully 

It is strongly advised to thoroughly check and evaluate the documents regarding NRI Loan Against Property as these are often lengthy and have extended terms and conditions mentioned regarding many details like processing fees, pre-payment charges, additional charges, etc. 

Here is a list of some important documents you need to produce to avail an NRI Loan Against Property (LAP):

  • Properly signed and filled application form 

  • Income proof- includes the salary slips, Form 16n and statement of bank account (salaried applicants), bank statement, financial statement, and income tax returns, (for self-employed candidates) 

  • KYC documents- ID, signature, address proof, and DOB proof 

  • Documents related to the title of the property

  • A cheque for processing fees

Along with NRI Loans Against Property, these rules hold the same for NRI Housing Loan and the candidate must follow to avoid future complications.

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