Seeking Home Loan For Nris? Keep These 5 Things In Mind

By Author: Samantha Kennedy
Total Articles: 2
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Owning a home in India is a milestone for many Non- Resident Indians (NRIs) who have settled abroad. It conveys a sense of belongingness and helps them stay connected to their roots. But what if they don't have sufficient funds for the investment? No worries! Thanks to supportive government policies, an NRI can get a home loan in India provided certain prerequisites are met. Here’s everything you need to know about NRI home loans.

1.Eligibility Norms: An NRI can take a loan for buying residential property, construction activities, purchasing a plot, home improvement /extension, and even renovation provided he/she meets the eligibility requirements. The criteria generally follow these basic guidelines.

a.The NRI loan seeker should fall within the age bracket of 18 to 60 years. Some banks list 24 years as the minimum age of the borrower.

b.Home loans can be obtained by NRIs who have been working abroad for two years or have a contract that spreads over a minimum period of two years.

c.The applicant should have a valid passport and visa documents.

d.Must have an NRE/NRO account

2.Loan ...
... Amount: The loan amount sanctioned by the lending institution is normally based on the property's cost. Apart from that, the applicant’s existing income, credit rating, educational qualifications, employment duration overseas also play a vital role in determining the amount.

3.Loan Tenure & Interest Rates: The NRI home loan tenure is usually shorter compared to that of an Indian resident who can avail disbursement of the facility for nearly 30 years. Most banks extend home loans to NRIs for 5-20 years. The NRI home loan rates are also a tad higher because an element of risk is perceived. It usually ranges between 8.7% - 10% per annum, depending on the lender.

4.Power of Attorney: An NRI can procure a home loan individually or with a resident Indian as a co-applicant who may or may not be a co-owner of the property. However, the NRI borrower doesn't need to be physically present in India for acquiring the home loan. S(he) can appoint a trusted friend/relative living in India as a Power of Attorney (POA) holder to act on his/her behalf to process and document the home loan with the bank.

5.Payment Options: The home loan for NRIs is disbursed in rupees and has to be paid back in the same currency. As per RBI regulations, the EMIs (Equated Monthly Instalments) for the home loan must be routed through proper banking channels such as the NRE/NRO (non-resident rupee/non-resident ordinary) account. In the case of direct International money transfers, the effect of foreign exchange fluctuations should be factored.

These are a few important things that NRIs must keep in mind when applying for home loans in India. Given that rules can differ from bank to bank, NRIs need to do their due diligence and interact with bank representatives to get complete clarity on all aspects before signing on the dotted line.