• NRI’s (non-resident Indians) are those who reside abroad to earn handsome incomes.
  • Most of the NRI’s find it lucrative to purchase properties in India and those who are not able to bring in all the funds required for the purchase of property, are interested in taking the NRI Home loan route.
  • Whoever comes under the FEMA (Foreign Exchange Management Act, 1999) is allowed to avail the home loan in India.
  • FEMA defines an NRI as someone who resides outside India for “employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period”.
  • It also states that an individual will also be considered NRI if he stays in India is less than 182 days during the preceding financial year.
  • Many people have a misconception that Indians residing abroad (NRI’s) are not allowed to take home loans in India. But that is not true and financial institutions are more than willing to lend to NRIs. Let’s take a look at the various features of NRI home loans and how they are different from resident home loans.

NRI home loan vs Resident Home loan

 Basis NRI Home Loans Resident Home Loans

Eligibility
  • The criteria related to minimum age and minimum years of work experience abroad differ from one lender to another.
  • Some banks require NRIs to have worked for at least 2 years abroad while others ask for only one year of experience.
  • Many lenders also have a minimum monthly salary as one of their eligibility criteria.
  • When you apply for a home loan, your eligibility is primarily dependant on your income and repayment capacity. Factors determine your home loan eligibility Your age, financial position, credit history, credit score, other financial liabilities, etc.

Document Required
  • For documentation, NRIs are required to submit a copy of passport, visa and employment-related documents, salary slips, appointment letter, employment contract, and address proof. Most of these are required for resident loans too except passport and visa-related requirements.

Documents you will need to submit with your loan application. Application form, Photograph, Identity proof (Anyone)Voter’s ID card / Driving license / Job card issued by NREGA / Aadhaar card / PAN card (PAN card only as identity proof)Address proof (Anyone) Passport / Voter’s ID card / Driving license / Aadharcard, Income details, Bank account statements.

Tenure

NRI home loans also have loan tenors of 20 to 30 years. In certain cases, lenders might introduce restrictions like 10 or 15 years from time to time.

A resident can get a loan period of up to thirty years.

Repayment

NRI loan repayment is due only in Indian rupees and not the currency of the country where NRI resides. Repayments can only be made by remittances from abroad, through normal banking channels or a Non-Resident Rupee (NRE) or a Non-Resident Ordinary Rupee Account (NRO).

Although you can take home loans for more than one property, the amount of deduction shall be restricted to Rs 1.5 lakhs. The amount of deduction includes other items like provident fund contribution, life insurance premium, tuition fees, PPF contribution, NSC, ELSS, etc.

The Home Loan Interest rates in India and other charges for NRI home loans are the same as those offered to resident Indians. These are some of the important features of NRI loans. But before you or your NRI friends approach the lenders, it’s better to do your research so that you are updated about any possible changes in NRI lending rules due to political or regulatory changes