NRI Home Loan: The ideal checklist to consider before applying for a loan

Plenty of NRI’s who’ve travelled abroad are looking for ways and means to invest in financial products that will earn them an income. Out of the several available options, residential properties have proven to be the ideal investment option.

In order to finance this purchase, you can opt for NRI home loan that will offer you the ideal financial convenience and flexibility. Not only does it cater to the needs of NRI’s such as yourself, but it is also designed to offer the ideal financial benefits at the same time.

So if you are planning to purchase a home with the NRI home loan, here are a few factors on the checklist you need to tick off:

Check your official NRI status: The RBI defines an NRI as an individual who holds a valid Indian passport. Additionally, the individual should be emigrating abroad for employment purposes, or to carry out any business, in a duration of stay that is uncertain. It is these individuals who are employed or carry out business outside India who can apply for the home loan for NRI’s under this scheme.

Maximum loan amount: While you may be able to apply for the loan, the amount you get in the loan will differ on certain factors. For one, your educational qualifications and income will play an important role. Normally, the standard rate for home loans extends to 80 to 85% of the value of the property you want to purchase. However, this will also depend on your monthly income. The maximum a loan amount that will be granted to your will be around 38 to 40 times your gross monthly income. However, some financial institutes equate a calculated EMI by your net monthly income. Even the location of your current employment will be taken into consideration. If you are earning in the Middle East or Europe, you may be viable to get a loan amount that is high.

Loan tenure:The Home Loan interest rate in India for NRI’s is normally higher that the interest rates that are offered to residents. This is due to the increase in the risk factors, and short tenure will be elements to be considered. Normally, the difference usually ranges from 0.25 to 0.5%.

Documents Required: Like any other loan, when you apply for the NRI home loan, you will need to submit a certain set of documents. They will include a copy of your passport, visa, employment, contracts, work permits, salary slips and your NRI bank account statements. You may also need to submit your employment card, especially if you are working in the Middle East.

Repayment of loan: The down payment and the repayment will need to be done in the Indian rupee and not in any other currency. Additionally, the transactions would need to be made through your NRI account with the remittances made from abroad. In the event, your status changes from NRI to the resident Indian, the terms and conditions of your loan will be revisedin accordance with your new income.

How to make a money transfer through NEFT?transfer money online, transfer money to India,

In today’s day and age, sending funds from one location to another is now made easy. However, if you want to send funds to a friend or purchase a forex card for a vacation, your banking cards will offer only little assistance. If you don’t have physical cash in your hand, you may write a cheque. However, it will take sometime to clear.

One way to avoid this lack of funds is by using the National Electronic Funds Transfer also known as NEFT. By using this service, you can transfer funds of up to Rs. 10 Lakh using your own bank account. So if you need to make a transfer money online here are the steps you need to follow:

Step 1: In order to initiate a transfer money to India or any city using the NEFT service, you first need to have access to the net banking service. You will also be required to have some information about the individual or the merchant you would want to transfer the funds to. This would include the account number, type of account, IFSC code and the beneficiary’s name. You will need to log into your account and fund the tab, for the third – party transfers. You will need to click that option where you can further choose between transferring within the bank, transferring to other banks or transferring via a banking card. You can even add a beneficiary from your account.

Step 2: After you add the beneficiary, you will be presented with two additional options, namely to add the beneficiary within the bank or add a beneficiary of another bank. If the receiver has an account in the same bank, you can go for the first option, else opt for the second option. In the next step, you need to input the bank account related details to make the transfer money online. This would include the account number, name and IFSC code. You will get an OTP from your bank to initiate the transfer and confirm it. Once you confirm the transfer, the beneficiary’s account will get added within a few minutes. However, this can depend on your bank.

Step 3: Once the account has been added; the bank will send you an SMS. In order to send money using NEFT, you will need to login to your account. You will then need transfer money to Indiaor within the bank itself. You can choose the account number from which you would want to send the funds and then choose the receiving account number. You will need to enter the amount you would want to send. Once you confirm the transaction, the payment should reach the receiver’s account within an hour’s time.
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How to save your funds as an NRI during the demonetization period

While the whole country has come to the terms of the demonetization move made by the government, NRI’s who have settled abroad around the world, are still dealing with the consequence of it. While the residents can still stand in line to exchange the demonetized notes for the approved ones, NRI’s are still figuring out ways and means to get rid of the old notes, from the approved sources and within the approved timeline. This has obviously risen to a stressful situation for most NRI’s abroad.

Given below are a few questions regarding NRI’s and answers related to the demonetization move.

How do NRI’s residing abroad exchange their old notes which aren’t valid any longer?

As per the government regulation, members would need to exchange their notes in India or authorise an individual to do it for them. However, at the moment, foreign branches of the Indian banks in both the public and private sector are not accepting any cash outside the country. If you are making a trip to India any time before the 30th December deadline, you can exchange or deposit your funds, in the appropriate NRI account, namely the NRO account. This is one of the NRI account benefits. If another individual is making the transfer on your behalf, you will need to make an authorization in writing, to enable the authorised individual to deposit the notes in the bank account in India. When the notes are being deposited, the authorised individual must present a valid identity proof to deposit the funds on your behalf. If the funds are with you abroad, you can send the funds across India through a trusted individual and make the deposit on your behalf.

Can NRI’s deposit all their cash in the appropriate NRI account?
NRI’s can deposit their funds, only in NRO account. This is part of the NRI account benefits for the NRO account, as only Indian currency can be deposited. However, if you are depositing an amount of Rs 2.5 lakh in the account, it will be reported to the tax department. It will then be matched with your income tax returns, wherein which, suitable action will be taken.

Can Indian residents who are travelling abroad exchange old denominations for the local currency if they have no source for exchange?

As mentioned previously, the notes can only be exchanged in the country. Therefore, those who are travelling abroad will need to wait to return home to India before they can exchange the notes. If you need to use funds, banking cards or traveller's cheques would be required to purchase local currency.

Can Indian currency be used in Nepal where it is used?

The Indian government had every right to demonetise its currencies. As of now, there is no official declaration about the status of the usage of Indian currency in Nepal. However, the government may take appropriate measures to ensure that currency that needs to be exchangedis done in the legal tender.
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Money to India: What you can do when you send money to India to the wrong account

When it comes to sending money to India or any other account, there are plenty of options you can consider. For one, you can always make a physical transfer, by sending funds through a bank. Otherwise, you can do it through online bank transactions. Alternatively plenty of mobile banking apps is available to make the required transfer, through a simple log in.

However, no matter the choice of medium of money transfer, there is always a risk of error when making the transfer. In the event, you make a wrong money transfer when you want to remit to India,here a few steps you can take.

• First, you need to remember the legal implementation by the Reserve Bank of India. The RBI has indicated that the transfer of funds electronically depends on the account number. In the event, you have punched in a wrong account or wallet number, which does not exist when you want to transfer money to India, you need not worry. The money will be transferred back to your account automatically. You can always contact your bank to hasten the process. Normally, it would take about a few days to a week for the money to be transferred back into your account.
  
• There are instances where you want to send money to India and have unintendedly punched in the wrong account or wallet number, but yet have the right beneficiary named. In this case, you can contact your bank and provide evidence that the transfer you made was a mistake. In this case, the bank, on your behalf will reach out to the account holder and ask for the amount to be returned. However, in this case, your bank will only function as a facilitator.
  
• Additionally, there are instances wherein you have typed in the wrong account o wallet number when you want to transfer money to India. However, the name of the unintended account belongs to a person who shares the same name. In this case, you will need to prove to the bank that the transaction made is wrong. However, like the previous case, the bank can only act as a facilitator.

In each of these cases, the funds that are deposited in the unintended account cannot be returned and given back to you. Once you have initiated the transaction to send money to India, the case is between you and the person you have transferred it to. Such situations normally become worse, if there is a combination of different banks, cities and branches.

However, to prevent such instances from occurring, here a few things you can take care of:

• Take extra effort to check whether the account number and the beneficiary names match appropriately, especially when you remit to India.
  
• Your bank may ask you to type your account number twice. If you happen to put in the wrong account number, the mismatched number will not allow you to proceed further.
  
• If you need to make a wallet transfer, ensure that the wallet you use is Payment Card Industry Data Security Standard compliant.

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Demonetisation: The easy way NRI’s can exchange old notes

The recent move by the government to demonetize the old notes of Rs. 500 and Rs. 1000 may have affected local individuals. However, this has also affected the NRI’s who have settled abroad and still possess the old notes with them. While residents have the means and resources to deposit the old notes in the bank and get access to the new acceptable notes, the same cannot be said for NRI’s.

NRI’s can run into difficulties if they possess any discontinues currency notes, especially amounting to a high value. Currently, selected NRI banking services in foreign branches of the Indian banks are not accepting the Rs. 500 and Rs. 1000 notes either to be deposited or to be exchanged. This has left individuals with limited options to exchange or deposit old notes and in certain cases, they might have to provide additional disclosures.

However, there are a few ways NRI’s can deposit or exchange these currencies. This canbe done if the individual can travel to India themselves and deposit the funds themselves in any of the local bank accounts. Alternatively, they can also authorise someone in writing to deposit the notes into their NRI account. However, this can be only done if they will be able to send money back home, or if it is already in India. In this case, the authorised individual will need an authorization letter with a valid ID proof, such a passport, PAN card, Aadhaar card or even a driver’s licence.

The rules and deadlines for the exchange are the same for residents as well as NRI’s. There is no limit on the amount that can be deposited. However, if the deposit does exceed Rs 2.5 lakhs, the individual will face an inquiry. The source of the funds will be clarified, irrespective of whether the individual has filed the tax returns in India or even abroad. In the event the individual hasn’t filed the income returns in India, a notice from the income tax authorities will be sent to the respective individual to their file the returns or produce relevant information or records to substantiate the income or deposits made.

There are several NRI banking services that are allowing the deposit of these notes, only in the NRO account. However, the individual would be required to disclose the source of the funds at the branch itself. However, these deposits need to be in line with the profile of the customer. This isbecause the banks had graded customers before the government’s demonetisation drive had started. In the event the NRI has deposited funds in the NRO account, it will be registered as a high-value transaction, wherein which, a copy of the currency exchange receipt would have to be provided. In the event the individual’s response is found to be unsatisfactory, the bank would be required to file a suspicious transaction report within seven days, which will be passedto the financial intelligence unit of India.
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Health insurance policy: All you need to know about sub – limits

You can never take your health for granted. At some time in your life, your health can take a turn for the worse. This can be due to genetic conditions or acquired ones. But no matter the risk and eventuality of you falling sick, you need to stay protected, regarding finance.

This is where the health insurance comes into the picture. A health insurance plan will help you ensure that you are financially taken care of when you fall sick, without putting a burden on your current savings. But when you are selecting any health insurance plans, you must look out for certain factors, namely sub – limits.
By definition in the legal sense of insurance, the limitations in an insurance policy apply to the amount of coverage available to cover a specific type of loss. The sub – limit is a part of the limits which would otherwise be applied to the loss.

How do sub – limits work?

We can take it through an example. Mrs Saini needed to undergo treatment to get rid of kidney stones, which would have amounted to Rs. 25,000. She already had a health insurance cover of Rs. 2 lakh, and hence was covered for the treatment. She got the acknowledgement from her insurance provider and underwent the required surgery. However, due to a few complications, she needed to undergo an additional kidney stone removal surgery which would have amount to Rs. 75,000. However, as per her policy conditions under the sublimit condition, there were limitations in terms of treatment costs for specific illnesses. She was viable only for 25% of the sum assured in her health insurance cover. Since she had already claimed Rs. 25,000 in her previous she was only viable for an additional Rs. 25,000. The remaining Rs. 50,000 she had to pay from her own funds.

What is the solution to such policies?

In order to avoid such sub – limits on any of your healthinsurance plans, you will need to first check if your health insurance is under the category of the old policies or under the new one. If it is under the old plan, switch to a new generation healthinsurance plan. In the old health plan, look out for the sub-limits policies, which you can compare to the new plan. In the same way, look out for sub – limits in the new plan. If you can avoid eradicating the sub – limits, ensure it is at a minimum level. While you may end up paying anextra premium for this sake, at least you will avoid the situation where you will be forced to compromise on your treatment if the situation ever arises.

In most cases, if you claim your insurance at least once in your life, you will recover the major part of your premium paid over the decades. While you may feel that you would lose several benefits by moving to a new generation plan, you can be well assured that you will still get the best of your tenure benefits.
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Life insurance plans: Mistakes you need to be avoid

As an earning member of the family, not only will you be paying off your bills and debts, but will also be the financial foundation for the other members of the family. In the event you pass away, this foundation can be affected, leaving a financial burden on the other members of your family. During this time, your family members may not have the financial ability to earn sufficient or even any funds to replicate your earnings, leaving them financially unstable.

However, with life insurance, you can offer your family the financial stability they require, in the event your death occurs. In this way, you can be well assured that your family is well taken care of, leaving you with a stress-free life. But before you opt for any of the life insurance plans, there are certain factors you need to be aware of. For one, you need to be aware of the possible mistakes that can happen when you apply for the insurance. Given below are some of them:

I don’t require insurance because I’m young: Youngsters who have just started earning may depend on their parents or siblings for the more complex financial requirements. However, the basic purpose of the life insurance is to ensure that your family members are not put in a situation where they are in a financial crunch, in the event of a death of the earning member. In this case, life insurance works as the ideal income replacement tool. You will first need to estimate the size of your financial liabilities, which has not been provided for otherwise. You will need to estimate then the shortfall in the savings in matching these requirements and adequately get a life cover. Opt for a plan that offers you a high cover at a low cost.

Treating insurance as an investment: Life insurance may be perceived as an endowment, money back offers, or market linked investments. These products have an element of insurance, with the potential to deliver returns. However, in reality, the life insurance policy will only offer you return through mortality charges. In other words, it offers a low investment chance. You only need to treat insurance as a means of financial protection over an investment product.

Exiting the policy at the wrong time: Circumstances may arise where the policyholder would want to exit the policy before the maturity is met. Exiting the insurance plans before a few years left to maturity, may not be the right decision. The reason behind is that the surrender cost will still exist, although it may be lower to the exiting charge in the initial years. Once the policy is bought, it should be continued till maturity, to optimise the cost benefits of the life insuranceplan.