Best time to settle loans in India

For non-resident Indians (NRIs), it is the best time to prepay their home loans since the Indian rupee is in a free fall.

The rupee hit a new low of Rs17.26 against the UAE dirham on Tuesday morning, having fallen by almost 12 per cent or so against the US dollar since May this year.

Although NRIs stand to gain higher interest rates on their fixed deposits as local banks now offer over 9 per cent on three year deposits, financial 
experts believe increase in base rates by banks will hurt home loan customers who have taken loan at floating rate.

Jones Lang LaSalle India, a real estate consultancy, is of the opinion that NRIs should think of prepaying their mortgages.

“It makes sense for NRIs to prepay their home loans at this stage, since the rupee has already fallen enough to offer a significant advantage in this 
respect,” Shobhit Agarwal, Managing Director - Capital Markets, Jones Lang LaSalle India, told Emirates24|7.

He, however, suggests that taking a speculative risk is not advisable.

Some UAE NRIs have already decided to clear their home loans, even if  partially.

Abishek Vasant, who has purchased an apartment in Pune, says: “I want to reduce my debt and clear all my liabilities before I leave the UAE for good.

”Although I haven’t got any notification from my bank on any increase in the rates, I am sure that it is likely to come. I would rather finish the home 
loan than continue paying a higher interest rate for longer tenure.”

He says he is currently paying a floating interest rate of 10.25 per cent.

In a property show held last year, Ranjan Babu bought a one-bed apartment in Coimbatore for Rs2.5 million with a 10-year home loan. The interest rate is currently at 10.5 per cent.

“Since the exchange rate is really good that I am tempted to remit more money to India. I am planning to part pre-pay my home loan,” he adds.

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