Guide for NRI Home Loan in India
Many Indians immigrate to different countries each year for different reasons, some for work, some higher studies, or for better business opportunities. This migration has led many families to relocate to different parts of the world like North America, Europe & the Middle East. NRIs are people who reside in a different country for a longer period and hold an Indian passport. According to FEMA, an NRI is “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 any Indian who has stayed in a foreign land for more than 182 days shall be considered as an NRI. For such cases, the banks provide home loans at competitive and exclusive interest rates.
An NRI home loan in India follows the same structure as a normal loan with the loans being repaid in Equated Monthly Installments (EMIs). The actual difference arises in the interest rates and the tenure, where the interest rates for the NRIs are slightly higher and the loan tenure is lower as compared to the loans provided to Indian residents. As the NRIs earn in a better and stronger currency like the US Dollar or Euro, the tenure is lower for them.
Benefits of NRI Home Loan
- Loans have attractive interest rates on a monthly reducing basis.
- Can choose between the fixed or the floating interest rates.
- Part–prepayment facility is available for zero fees.
- Get free personal accident insurance depending on their loan outstanding.
- Doorstep service in India is provided till disbursement.
NRI Home Loan Eligibility –
- Eligibility Criteria: Salaried or Self-Employed
- Work Experience: Minimum 2 years of work experience in the company they are already working in.
- Age Criteria: Minimum: 18 years Maximum: 60 years/retirement age
- Loan Tenure: Up to 30 years
- Loan Amount: Depends on the borrower
- Interest Rate: 8.70% onwards
- Prepayment Charges: Nil to a maximum of 2%
- Late Payment Charges: 1% to 3%
- Nationality: Indian
- Resident Type: Non-Resident Indians (NRI) or Persons of Indian Origin (PIOs)
Profiles eligible to apply for a housing loan are
- Non- Resident of India (NRI)
- Person of Indian Origin (PIO)
- Overseas Citizen of India (OCI)
Prerequisite: As an NRI, you need an Indian resident as a co-applicant or a co-owner of the property and a part of the home application form which needs to be submitted.
Age: An NRI can own a property in India at the minimum age of 21 years and the maximum age limit is either 60 years or retirement whichever is earlier at the time of maturity of the loan.
Work Experience: As a loan applicant, you need to have overseas work experience up to one year for people who have a stable salary and two years for self-employed people.
NRI Home Loan Documents Required –
NRIs need to submit these documents for a hassle-free home loan process:
- Full passport and work visa copy
- Duly filled loan application form
- Employer ID card
- 3passport size photographs
- Proof of valid work permit
- Copy of employment contract
- Current overseas residential proof, i.e. house lease agreement, bank statement, utility bill, card statement, etc.
- Salary slips of the past three months
- Last six months bank statement from the salary account and NRE/NRO account
- General power of attorney
- Last year ITR except for NRIs in Middle East nations and Merchant Navy Employees
- Details of previous loan(s), if any
- Property papers
Factors to consider before putting in papers for a home loan
- Loan Repayment
As per RBI rules, the repayment of a loan must be done in rupees through an Indian bank account or using NRE or NRO accounts. If the property is rented out, the rent receipt can be used against the EMIS.
- Tax Benefits
NRIs along with the Indian residents can avail of tax benefits on home loans under section 24 and 80c. The non-resident of India can get tax exemption on the interest paid for a minimum of Rs. 2,00,000 and 1,50,000 on the principle under section 80c. If it is a joint loan taken with another NRI, then each member can avail of the tax benefits separately.
- Restrictions in Properties Owned
The Government of India has stipulated that the NRI can only own two houses in India. That is, they can own only 2 properties for residential purposes. Even if the properties are rented out they can only own two. The NRIs are allowed to own any number of commercial properties but cannot own land for agriculture.
Also, Read: 10 Important Things To Consider Before Taking A Home Loan