5 Things NRI Must Know When Applying for Home Loan
If you are an NRI and are looking to apply for a home loan, you must be aware of the specific regulations. Here are five things you ought to know about home loans in India.
For most Indian residents buying a home is a dream. Today, with the easy availability of home loans, many people are making their dream a reality. But, can NRIs buy a home in India and avail of a loan? Yes, it is equally easy for NRIs to obtain a loan, and buy the property of their choice; many lenders offer NRI home loans, subject to fulfilment of certain requirements.
If you are NRI and are looking for a home loan, you must be aware of the following things.
When it comes to granting a home loan for NRI, most lenders in India follow the RBI definition of the NRI status, i.e., an Indian citizen who holds a valid Indian passport and stays abroad for employment or business for an uncertain duration is an NRI.
What Are The Minimum And Maximum Amount NRIs Can Borrow?
The lenders in India assess the home loan eligibility for NRIs based on the income, and qualification. Generally, lenders provide a maximum loan of 80-85% of the property’s value, and the maximum loan amount granted is 35-40 times the gross monthly income. Some lenders decide the maximum loan amount depending on the EMI (equated monthly instalment) to the net monthly income ratio.
Few other lenders have different criteria based on the education qualification and the place of residence. For example, one of the leading banks in India requires an NRI based in the middle-eastern countries to have a minimum salary of 36000 Dirhams for a loan tenure ranging from six to ten years.
Also, it is important to note that most lenders in India require the NRIs to have a minimum qualification of a graduation degree to be eligible for a home loan.
The interest rate is one of the most important aspects of a home loan, as it has a direct impact on the EMI and, subsequently, the affordability. Generally, the NRI home loan rates are 0.25% to 0.50% higher than the loans for the resident Indians.
When you compare the home loan offers from different lenders, make sure that you choose the one with the lowest interest rate so that the EMI is affordable.
The documentation for the NRIs is different from the resident Indian citizens. Most lenders require the NRIs to submit the following documents – a copy of valid passport and visa, copy of the work permit, contract of employment, salary certificate issued by the employer, copy of the NRE/NRO bank account statement. For applicants from the middle-east countries, you must also submit a copy of the employment card.
Today, with most lenders in India offering online services, you need not wait for your next trip to India to initiate the home loan application process. You can apply for a loan online. Also, most banks have branches in many foreign countries. You can submit the application form and submit the documents online.
However, you must execute a general power of attorney in favour of the resident Indian who would act as a POC (point of contact) on your behalf with the bank. If a power of attorney is issued while you are living abroad, it must be signed in front of the embassy officials.
Repayment of the loan
You must repay the loan through your NRE (Non-residential external) bank account or NRO (Non-residential ordinary) with remittance from the country of your residence. The EMI should be paid in Indian currency only.
Now that you are aware of the important factors about NRI home loans, you can make an informed borrowing decision.