For a common man, buying a house is one of the biggest financial goals. Irrespective of where you live, having a house of your own is what everyone dreams of. If you are living in India or wish to come back sooner or later to your country, a house is a must. Several kinds of home loans are offered by banks considering the sentimental value that a home holds for anyone in their life. The Indian real estate market also offers NRIs a variety of lucrative investment opportunities to invest in.
Before availing of an NRI home loan, it is important to understand if you come into that category or not. In general, Non-Resident Indians (NRIs) are the people who have valid Indian passports being a citizen of India but do not stay in India. Due to work or studies, they might have traveled to a different country for a longer duration. As per the Income Tax Act, a Non-Resident Indian is a person who stays in India for less than 182 days in a financial year.
There are some differences in the eligibility and process depending on the type of loan you wish to take. For the NRI loan to get approved, several lenders require the NRI applicant to at least have a graduate degree. Some even require the NRI applicant to have an Indian resident as the co-applicant of the loan. Listed below are the major points that make an NRI loan different from the normal Indian resident loans.
- The tenure of a loan for a residential home loan is a maximum of 20 years whereas for the NRI home loan it ranges from 5 to 15 years only.
- The rate of interest on home loans for the NRIs is also higher as compared to the resident home loan because of the risk that is – lending money to NRIs.
- For resident home loans, you only have to submit KYC documents like identity proof, address proof, income tax return slip, bank statement, etc. On the other hand for NRIs, you have to submit all the documents required by the resident home loan and also submit documents like a copy of passport, contract employment, valid visa papers, salary documents, a general power of attorney, etc. But these documents may vary from lender to lender.
- A resident loan could be repaid through a regular savings account of a bank, but NRIs are required to repay the loan only through NRO and NRE accounts with remittances from abroad. Also, the mode of repayment for NRIs should be Indian rupees only.
Some important key points regarding the availment of NRI home loans you should be aware of are:
- Before deciding the value of the property you wish to buy, it is advised to get the loan approved first. You should ensure that you have enough financial buffer before finalizing the property.
- The age of the property you want to purchase does not matters. If the property you are investing in is maintained well and has a residual age of at least 12 years then the bank will definitely fund it.
- Understand the interest rates from different banks before availing as different banks have a different set of rules and rates of interest.
- You can get a five basis point of reduction in your rate of interest under your home loan if a female is the joint owner of the property.
- If two NRIs together are investing in a property in India then they can also opt for a joint home loan. But they can opt for this only if they have blood relations or stay in the same house.
If you are a Non-Resident Indian and looking to avail of a home loan then you can contact the bank directly and ask them about their eligibility criteria and other specific requirements.
You can also talk to home loan advisors for your queries. There also exists a lot of online platforms where you can submit the required details and it will help you to shortlist the right lender. If you want them to manage your entire procedure of home loan then also ask for other important documents.
After fulfilling the eligibility criteria and completing the documentation and other formalities, you can easily avail you NRI home loan to purchase your dream property in India.