Published on: Jun 14, 2015 @ 20:26
Many NRIs like to have a home back here in India and a home in their native country is simply a must. Buying a property is one of the greatest dreams for most of the NRIs, no matter which part of the world they live in.NRI’s home loans schemes of many financial institutions are available to make that dream a reality.
NRI’s home loans are now easily available in India, subject to fulfillment of certain conditions. Home loans can be availed for any property ready for possession or under construction, construction of house on an owned plot or for alterations to the existing housing property. Buying of a plot also qualifies for a home loan. Make sure to check the title papers of the property, especially if it is inherited or jointly held.
As per the definition specified by the Reserve Bank of India (RBI) i.e., “An Indian citizen who holds a valid Indian passport and stays abroad for employment or carrying out business or vocation under circumstances indicating an intention for an uncertain duration of stay abroad is an NRI”. So those eligible for home loans under this category would be those employed or carrying out business outside India.
Education qualification and income play an important role in deciding your loan eligibility. Like, only graduate NRIs can avail home loans in India.
An NRI loan applicant must be 21 years old and maximum age limit is 60 years or retirement age, whichever is earlier at the time of loan maturity.
On the basis of the repayment capacity of the NRI, financial institutions fund 80 per cent of the value of the property or the cost of construction as applicable and 75 per cent of the cost of land in case of purchase of land, subject to the Gross Monthly Income (GMI) of an individual.
Generally, an NRI is eligible to get a home loan in the range from a minimum of Rs 3-5 lakhs to a maximum of Rs 1 crore, this again is subject to variable depending on the priorities of the home loan. If your spouse is working both of you can opt for a joint home loan to enhance your loan eligibility.
Besides, the home loan tenure for NRIs is available within the range of 5 – 15 years. Also, the rates of interest charged for home loans to NRIs generally remain at par with those offered to Resident Indians.
The documents normally required to be submitted by the NRIs are copies of the passport, valid visa, work permit, contract of employment, work experience certificate, salary certificate and bank statement of NRE / NRO accounts, overseas bank account for the last three months showing salary credits, the labor card / identity card. For those residing and employed in the middle east, copy of employment card is also required. Salary certificate should be attested from the embassy if the salary is not getting credited to a bank.
Self employed applicants need to provide copies of six months overseas bank account statement and NRE / NRO account, brief profile of the applicant and business or trade license or equivalent document, passport with valid visa stamp, computation of income, P & L account and Balance Sheet for the last three years certified by the CA / CPA or any equivalent authority as the case may be.
Another document required is the power of attorney. The POA is important because, since the borrower is not based in India; the HFC would need a ‘reprentative’ in lieu of the NRI to deal with and if needed. Although, not obligatory, the POA is usually drawn on the NRIs parents / wife/ children.
Payment for the purchase of property should be made from either funds received in India through normal banking channels or funds held in a non-resident bank account. The repayment of the loan, comprising of the principal and interest including all the charges are to be remitted to the HFC from abroad through normal banking channels through Non-Resident External ( NRE) or Non-Resident Ordinary (NRO) or Foreign Currency Non-Resident (FCNR) accounts in India. In case you let out the property you can use the rent to repay the loan as well. Cheques issued from a relative’s local account can also be used to make the loan payment.
Ajay Verma, founder, and writer of The Housing World, a real estate and mortgage news website. He has over fifteen years of rich experience in the above-mentioned industries.