As a Non-Resident Indian, no matter where you are and where you stay, your heart always lies in India! And where the heart lies is where home is! Buying a property in India has always been a matter of pride and an obligatory act. Although home loans are available for Indian citizens, there are also banks which provide home loans to NRI’s. So you can fulfill your dream of coming back to your home country or just have a house to stay in. But before applying for an NRI home loan, these are some very important things you must know about them.
Home Loan Eligibility Criteria
There are many questions about the eligibility for taking an NRI loan. When it comes to eligibility, the age limit is a factor for taking up loans. Age should be between 21 to 60 (or your retirement age). The age limit varies from bank to bank. You also need to have at least 1 to 2 years of job experience or 2 years of self-employment, although years of residence in the country of birth is not a criterion. Another factor for eligibility is that banks require a certain educational qualification for giving you a loan. The educational qualification might include having a diploma or being a graduate from a college/university.
While applying for the home loan, you might not be able to apply for it alone, as some banks will require a co-owner for your property and the co-owner should be from India. (there are some banks which will charge a reduced interest rate if the co-applicant or co-owner of your property is a female)
The amount of loan you will get will be based on your repairing capacity and credit score, which will be based on the amount of repatriable income you will receive, which means only that income will be counted which would fit both the countries’ laws, in other words, the income which you will be able to bring back to India.
Loan Tenure and Amount
The tenure for such NRI loan is around 30 years. Some banks may only offer the time period of 20 years or below (varies from bank to bank). The tenure will also vary upon whether you are a salaried employee or self-employed. It is recommended to take loans with shorter tenure as this will reduce the interest burden on the loan, however, the monthly EMI will be larger and it might not fit into your budget, so you can choose accordingly. The tenure depends on the type of profession, salary received, etc. The amount of loan is dependent upon the income that you generate, and how much can be brought back to the country. Some banks might also consider your educational qualifications as a factor for the amount of loan given. This system totally depends upon the credit score, which can be available online, if your credit score seems low, you should fetch the sheet, make necessary adjustments and increase the credit score according to your satisfaction, and only then, make a home loan application.
Interest Rates
The interest rates for NRI loan is the same as a home loan for the citizens of India. They differ from bank to bank so you can look into it and select the best bank with the best interest rate, although it is recommended to select floating interest rate loans as if you select fixed interest at 10% you will not be able to get the benefit of lower interest rates, if at all it happens in future.
Properties You Can Buy
The Reserve Bank of India creates certain restrictions under its guidelines for the purchase of property for non-resident Indians. NRIs can only buy residential property and commercial property while they are not allowed to buy any other plots of land for agriculture or plant cultivation. These are strict guidelines that are provided by the RBI.
Required Documents
There are many questions regarding what types of documents might be required to get a home loan. The information of these documents is listed on individual banks’ websites but here are some summarized requirements that banks need for approving home loan:
- Income Proof
- Banking details
- Age Proof
- Address Proof
- Identity Proof
- Appointment Letter or Employee Letter
- Power of Attorney – This is a written authorization which gives a donor, grantor or principal authority to represent you on any legal or other matters that need your presence.
Procedure to Apply
NRI Home loan can be applied through online platforms or can also be applied by visiting a branch of the bank personally. The process can be varying from bank to bank but here is the basic procedure to be followed to apply for the loan.
- There are a lot of online platforms available where you can submit your loan application and choose the right lender.
- After choosing the right lender you have to submit all your documents on their site and follow the procedure which is laid out by the bank.
- Then you will be required to issue a power of attorney so that a person can represent you and be the joint owner or co-applicant of your property.
- You will once have to visit the Indian Embassy of your country to take the power of attorney from the lender to whom you are applying. You will have to fill out a form for this which is in the favor of your Indian co-applicant and then the embassy will put a seal of approval on it.
Repayment of Loan
The repayment of the home loan can be done in various ways, and you can select one which suits your situation. It can be done through normal banking from your country or can be repaid through the funds held in your NRE/NRO account. You can also repay from the rent that you receive from the property for which you took the loan.
Countries for NRI Home Loans
The resident country of NRI matters before applying for a home loan. NRI living in countries such as America, United Kingdom, Australia, European Countries, and a few Asian Countries such as Japan and South Korea do not face any kind of problem when applying for a home loan, but that may differ from bank to bank.
NRI home loans are becoming increasingly easy to get and are having increasing options for you to consider. Before taking a loan you should conduct thorough research and then choose an option of a loan from a bank. All the above information might help you get an idea of what NRI home loans are and if you should consider taking it.
Author Bio
Savan Dhameliya
