Five things about NRI Home Loans that you should know

by Litty Jose Finance Analyst

Owning property in your native country is like a dream for most NRIs. It’s like planting roots in your home country, a place where you spent your childhood. It creates a tie with your country and many NRIs aim to own property in their home country. One thing that keeps them from buying property in India is the hassle of applying and getting an NRI home loan. Applying for a loan for person who doesn’t live in India can be very stressing, with a lot of formalities and documents to be submitted. But now perhaps is the best time for an NRI to get a home loan as banks have eased up on procedures involved in approved an NRI home loan.

With the real estate market being in ripe state and the banks too lending a helping hand to NRIs, it’s now easier than ever to get a home loan and finally purchase a property in their home country. An NRI needs a special application for home loans as they do not reside in the country. If you’re considering or are in the process of getting an NRI home loan then here are a few crucial things that you need to know before you apply.

1. An NRI is defined by the RBI as a person who holds a valid passport but is immigrating to another country for an undecided period of time, for employment purposes or to carry out a business. Only a person who is employed or has a business outside India is eligible for an NRI home loan.

2. The amount that is sanctioned to you as a loan will greatly depend on your educational qualifications and overall income. Normally a loan is sanctioned for 80% to 85% but the amount sanctioned will be decided on the basis of your monthly income.

3. The home loan interest rate in India for NRI’s is normally higher than the interest rate that is offered to residents. This is due to the increase in risk factors. Normally, the difference ranges from 0.25 to 0.5%.

4. The documents required for an NRI home loan are largely similar to the ones required for any other loan. An NRI will additionally require his/her passport, Visa, work permit, employment proof etc.

5. All payments towards this loan need to be done in the Indian rupee and not the currency of the NRIs current residence.