r2i forum

Hi,

I'm an OCI living abroad. I own two houses in India. One apartment and the other is an independent house.
I am in the process of building a second floor in my independent house I am expecting the cost to touch about 25 Lakhs, I could afford about 15 Lakhs and need to arrange financing for the remaining 10 Lakhs.

I am seriously thinking of getting a loan from a bank in India in place of abroad. I will arrange to make monthly payment from here.

My apartment might cost about 45 Lakhs now, can I use that apartment as collateral to the bank to get the 10 Lakhs loan and pay the money to the builder to complete construction of the second floor of the independent house.

I don't want to take the independent house to the bank. My Father has Power of Attorney for the apartment, so he could take care of the loan business on my behalf.

Is it doable ? any challenges ?

Thanks,
Jay.

It is my understanding that banks are not accepting RE property as collateral in India. However for the construction of new floor, since your equity is higher than the bank, it could consider your home loan for 10 lacs on the basis of your employment as NRI and your exposure to other loans.

Jay
Loans are basically two kinds and are commerically different
1) Home loans - Purchase / construction of home with land
2) Mortgage loans - Loan on the house.
The home loans will attract home loan rate of interest. Typically different banks offer different rates of interest. ranging from 10 to 11%. and is given to NRI without any restriction. with less processing fee and more tenure.
The mortgage loans will attract higher rate of interest say 13-14% with lesser tenure and not many banks fund NRI. The processing fee will be high.
And again, there will be bank based POA. So a general power that is already given may not make any difference. Still you would be required to carryout the POA as per the bank format
We deal with Govt banks. You may call us for further clarification.
Sathya
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