How can a NRI apply for a home loan in India?

blog, Finance, NRI, Real Estate

Owning a property in India is everyone’s wish or dream. NRIs also have started to invest their money into the properties in India as the Indian sector has a massive scope of growth in the future. The number of expatriates putting their money in the country’s real estate sector has gone up.

However, in the absence of a well-designed regulator at present, NRIs have to face a lot of trouble while investing their cash. They are also not aware of the rules & regulations of the Indian banks when applying for home loans.

So here we have a list of things you should keep in mind when applying for home loans in India.

Eligibility: If applying for home loans in India; NRIs, PIOs & OCIs are only eligible. Whereas citizens of Pakistan, Bangladesh, Sri Lanka, China, Nepal, Iran, Afghanistan or Bhutan are not eligible for home loans in India.

Age requirement: The minimum age of the applicant should be 24 years and the maximum should be 60 years if applying for home loans in India.

Work experience: Applicant should have a minimum overseas work experience of 6 months with total work experience of 2 years if applying for home loans in India.

Property eligible: NRIs can apply for home loans for the purpose of construction of new home/flat, purchase of an already built home/flat, extension to a home/flat, purchase of a built-up plot. The property can be residential or commercial but not farm or agricultural land. If the property is well maintained and the residual age of the property is at least 12 years, then the bank will definitely fund it.

NRIs have to submit below-mentioned documents while applying for home loans in India:

  • Passport & visa forms as part of KYC exercise
  • Details of permanent address in India
  • Deputation or appointment letter, work experience, certificate, work permit and contract of employment
  • Salary certificates and statements of NRE and NRO accounts
  • Foreign land address proof, verified by your employer, along with the tax returns statements from the foreign land
  • Qualification certificate along with General Power of Authority

It is desirable to appoint any of your relatives as a Power of Attorney holder in India. The POA holder would be entitled to act on behalf f you as per the authority provided under the POA agreement and your physical presence need not be required at all times for processing your home loan. Banks usually allow an advance of 80-85% of the value of the property, subject to the GMI of an individual.

An NRI usually has to pay a higher rate of interest than resident Indians. The tenure for a home loan to an NRI usually ranges between 5 to 20 years but only it can it go up to 30 years for salaried professionals. The repayment of these loans can only be through NRE or NRO account. There is no penalty for pre-payment of the partial or full value of the outstanding loan amount paid from your own sources.

You are eligible for a tax deduction on interest paid and loan repayment on your home loan if you’re an NRI as per the Income Tax department. You are eligible for the deduction of up to Rs. 1.5 Lakh on housing loan principal repayment under section 80C and up to Rs. 2 Lakh on interest payments if the home is lying vacant. If there is a change in the status of you NRI to the status of resident of India, the home loan is reworked according to the revised income and interest applicable is charged and the tenure is revised.

With the easy availability of home loans in India, NRIs can build their wealth in their homes through their favorite investment options of the property. To save you from all of the paperwork & hard work of applying for loans, Global Indian Solution is always ready to help you with our expertise on the same.