Considering an NRI home loan? Bear These 5 Crucial Points In Mind

As a Non Resident Indian (NRI), you have migrated to a foreign country in search of better job prospects. Over the years, you may have earned enough to consider buying a home in your own country. Naturally your first step is to look for the appropriate NRI Home Loan in India. It is important to know and understand your eligibility, the kind of loan you may get and the repayment schedule involved. We will tell you all you need to know.

1. What Kind of Property Loans Can You Opt for?

As an NRI looking to invest in property in India, you can consider applying for a loan for the following kinds of homes:

• A ready to move in property
• Property under construction
• Property to be constructed on a plot of land already owned
• Upgrading a currently existing property

2. What Loan Amount Can You Look Forward to?

There are a couple of considerations based on which the loan amount provided is decided upon:

• The educational qualifications of the loan seeker. Being a graduate or higher in terms of qualifications will allow an NRI applicant to be eligible for a loan.
• The income of the NRI applicant. Here the Gross Monthly Income (GMI) is taken into consideration. In some cases, a comparison is made between the prospective Equated Monthly Installment (EMI) and the Net Monthly Income (NMI) of an individual.
• Most banks have a few additional criteria based on job profile, country of residence etc. these are factors that you will have to research based on your individual case.

3. Loan Tenure and Rate of Interest:

NRIs may avail a home loan only for a restricted period of 5 to 15 years. In comparison, an Indian resident may apply for a loan with tenure up to 30 year. Any extension is based on the discretion of the bank. The margin of interest is also higher for an NRI loan and is usually around 0.25% to 0.50% more on the regular rates charged.

4. Documentation Requirements

The documentation for an NRI applicant is slightly different from that of a resident and may include the following:

• Copies of passport
• Valid work visa and permit
• Employment contract
• Work experience certification
• Salary slips
• Bank statements of NRE or NRO accounts
• Applicant from the Middle East have to include employment card copies

Most banks have overseas branches in several countries and you are likely to find one close to you for submission of your documents. For a few other banks, you will even be able to make your submission online. You could also consider giving a local resident a Power of Attorney to help facilitate the process.

5. Loan Repayment

When you apply for a loan as an NRI, you will be able to repay it only from Non-Resident External (NRE) or Non-resident Ordinary (NRO) account. All repayment will have to be done in Indian currency.During the course of repayment should your status change back to that of an Indian resident, the loan amount, tenure and interest rate will be reworked to fit your new status.Though the process is relatively hassle-free, do note that every bank may have a few requirements that vary from the norm. It is advisable to chalk out things in advance, make essential enquiries and have the documents ready. It is best that you consult the bank that you plan to approach and have your documentation in place accordingly.

Summary

• An NRI may apply for a home loan in India based on certain criteria
• The tenure is lower than that provided to a resident and the rate of interest marginally higher
• The loan may be repaid only through a NRE/NRO account in Indian rupees
• Should the status of an NRI change to a resident, the loan will be reworked to match the new status