Complete Guide to NRI Home Loans

Just like Resident Indians, Non Resident Indians (NRIs) can also avail housing loans from banks to buy property in India. Here are some of the frequently asked questions:

What kind of property can I buy with NRI home loan?

They can purchase a residential house either under-construction or on resale, can even take loan for self-construction of a residential property on a plot of residential land in India.

Not only this, they can get finance for the purchase of a plot of land allotted by a society/development authority or even to renovate/improve an existing residential property in India.

What are the eligibility requirements for NRI home loan?

Eligibility criteria is different for various banks. Here are some common requirements. Please check with your bank for exact requirements.

  • You must be minimum of 25 years old.
  • For NRI applicant, the maximum age limit is 60 years or retirement age (whichever is earlier) at the time of loan maturity.
  • If salaried applicant, you should have been abroad for a minimum period of 1 year.
  • If a self-employed applicant, you should have been abroad for a minimum period of 3 years.

For how many years can I take home loans?

Here are the requirements as per ICICI home loans:

  • For Salaried- Loan tenure up to 10 years, the minimum qualification to be  Graduate/ Diploma. Loan tenure between 11 to 15 years, for Middle east minimum qualification, is Post Graduate/ professional degree.
  • Loan tenure 11 to 15 years,  for the USA and all other countries minimum qualification is Graduate/ Diploma with minimum 3 years of employment abroad/ professional degree with min 1  year of employment abroad.
  • For Self-Employed- SSC or it’s equivalent.
  • Maximum tenure: Maximum tenure for Home Loan and Home Improvement Loan is 20 yrs / Maximum tenure for Land loan and Home equity loan-Residential is 10 yrs. No Office Premises Loan is allowed

How much amount can I take as home loan?

Like resident Indians, NRIs, too, can avail of up to 80- 85 per cent of the total amount (depending on the flat value) of the cost of residential property as a home loan.

But the down payment should be done from direct remittances from abroad through normal banking channels or from non–resident external ( NRE) account and /or non-resident (ordinary) (NRO) account in India. Even the EMI payment should be remitted to the lending bank from any of these accounts.

However, in the case of an NRI, there is a stress on certain pre-requisite for the loan sanction like qualifications, current job profile, past experience, probability of continuing abroad for the loan tenure and probability of servicing the loan with an extended tenure in case of return to India. The loan-to-value (LTV) ratio for NRI customers varies from one bank to another, though the manner of calculation is the same in case of a regular home loan.

The income taken into account for calculating the home loan eligibility for an NRI is the repatriable income, plus any income in India. For NRIs working in countries that restrict repatriation, only the repatriable portion of the income is considered for calculating loan eligibility.

Though the regular home loan tenures can be up to 25 years, loan tenure for NRIs is normally 10- 15 years. Along with documents required for a home loan, some additional documents are required to be submitted along with the application form for an NRI home loan.

These include:

  • A copy of your passport and visa
  • A copy of the appointment letter and contract
  • A copy of the labour card/identity card (translated in English duly countersigned by the consulate) if employed in the Middle East
  • Salary certificate (in English) specifying name, date of joining, designation and salary details
  • Bank statements for the last six months-both domestic (NRE/NRO/FCNR) and international Contract slip with income details in case employed in the merchant navy
  • Copy of local income tax returns filed in the country of residence
  • Loan eligibility can be enhanced by taking a joint loan with relatives. However, for credit reasons banks allow only a select list of relatives to be joint owners of the property
  • Repayment of home loans for NRIs is permissible through specific sources:• By remittance from abroad through recognised banking channels
  • From any deposit accounts maintained validly in India including Non-resident (Ordinary accounts)
  • From rental income derived from the property by specified close relatives

It is important that an NRI provides General Power of Attorney (POA) in favour of a local relative as per the draft of the bank which should be duly attested by the Indian consulate in the country of his residence. In case the loan borrower is in India, the POA can be locally notarized.

Most banks require the POA to ease the process of dealing with the NRI lender. The POA holder only gets the powers that you give and does not have the power of dealing with the property.

Like resident Indians, NRIs also enjoy certain tax benefits on interest payments, if they have any income chargeable to tax in India. Also, if you want to pre-close the home loan a pre-payment penalty will be charged by the bank. Many banks have stopped charging pre-payment on floating-rate loans.

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