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.
Home Loan for Non-Resident of India
- NRIs are however allowed to buy any property or any plot both for commercial or for residential use. However,
- Agricultural land
- Plantation property, and
- The farmhouse is thus not permissible unless there is any specific consent from the RBI.
- 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 meets the following criteria.
- 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.
Age to apply for a home loan
- It is easy to apply for home loan. Any person who is above the age of 21 can apply for home loan.
- The ruling factor for the home loan sanctions is the income and educational qualification of the applicant.
- The borrower is required to possess at least a graduation degree or a diploma certificate.
Documents for Home Loan
- The documentation requisites thus mostly include
- Passport copy
- Valid visa
- The work permit copies
- The proof of foreign residence
- Employment contracts
- Salary certificate, and
- Updated NRE/NRO account statements.
- Certain banks may ask for more documents which would either be based on
- The income, or
- The location
- However, the borrower is not supposed to make a visit to India to apply for home loans.
The rate of Interest for NRI
- Banks allow 80 to 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.
- If the borrower wants to purchase the lank, the banks pay the loan amount directly in the favor 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.
- It can be extended at the discretion of the bank for the selected individuals.
- Most of the banks have a general idea that repayment capability is however much higher for those who are living abroad.
Repayment of the loan to NRI
- The down payment for these loan and the repayment of the loan can only be done in Indian currency
- 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. NRI can also make the prepayment of home loan.
How can NRI apply for a loan in India?
NRI can apply for a home loan either by
- The quick visit to India, or