While the guidelines which are to be followed by an NRI in order to apply for home loan are same as those for the resident Indians, but there are certain terms which differ for the former. NRIs are however allowed to buy any property or any plot both for commercial or for residential use however agricultural land, plantation property, and farmhouse are thus not permissible unless there is any specific consent from the RBI.
So if the borrower has shortlisted a property and he wants to approach a bank, it would be a good idea for him to ensure that he meet the following criteria.
This firstly begins with the NRI status in the first place. Both the Non-Resident Indians and the Persons of Indian Origin can thus apply for home loans. While the salaried people need to have spent a minimum of one year in an employment abroad, the businessmen or the self-employed are eligible only after three years of their employment.
Furthermore, the self-employed might thus find themselves in a difficult situation for battling the stricter rules and the challenges. For example, The PIO and OCI may thus not be allowed to buy the plots and commercial properties but those who are classified as NRIs can. Certain jobs may thus also be treated differently.
Any person who is above the age of 21 can apply but a ruling factor for the home loan sanctions are the income and educational qualification of the applicant. One is thus required to possess at least a graduation degree or a diploma certificate.
The documentation requisites thus mostly include passport copy, valid visa and the work permit copies, the proof of foreign residence, employment contracts, salary certificate and updated NRE/NRO account statements. Certain banks may thus ask for more documents which would either be based on the income or based on location. However, the good news is that one is not supposed to make a visit to India to apply for home loans.
Most of the banks allow 80-85% of the value of the property which is subject to the gross monthly income. The rate of interest for the NRI home loan tends to be the same or sometimes it is marginally higher than the resident loans due to the higher risk which is involved. In case of a flat purchases, the banks pay the loan amount directly in the favour of the builder as per the due dates which are mentioned in the agreement. Unlike the resident of India , the tenure for the NRI home loans is thus usually restricted to 15 years and it thus can be extended at the discretion of the bank for the selected individuals. This is thus because most of the banks have a general idea that repayment capability is however much higher for those who are living abroad.
The down payment for these loan and the repayment of the loan can thus only be done in Indian Rupees and thus through normal banking channels or NRE/NRO accounts by way of remittances from abroad. In case the house bought is for an investment purpose, the RBI would also permit the rent which is received to be paid against the EMI.
In order to quicken the process, the person must assign the power of attorney in advance. With the numerous housing portals which are dominating the online space today, the ease of shortlisting a house and then applying for loans has thus become a child’s play. Some of these portals thus also have partnered with the financial institutions in order to provide better service and then a hassle free experience.
Thus if you intend to apply for a home loan either by doing a quick visit to India or by sitting comfortably on the foreign shores, then here is a quick checklist in order to keep in mind.
· Cross check your eligibility for applying, compare bank rates and the terms of the loan.
· Study the market, then shortlist a property and then verify its details.
· Have all the documents such as like passport, valid visa and the work permit, contract of employment, work experience certificate, salary certificate and the statements of NRE/NRO accounts etc., ready in advance. This thus reduces the approval and processing time.
· Then assign the POA to a trusted family member or a friend.
· Last but not the least keep a track on the repayment and then smooth closure for a clean credit history.