Home Financing Options for NRIs Buying Property in India
by John Kendy Marketing ManagerBesides regulations for the type of properties that NRIs can
purchase in India, legal provisions also exist on the mode through which these
purchases can be financed.
When a non-resident Indian (NRI) opts to purchase a property in
India, there are several regulations that govern how such a purchase can be
financed.
Sources for Financing a Real Estate Investment in India
The money for purchasing a property in India has to come
through banking channels only. Consequently, the payment cannot be tendered in
the form of travellers cheque or foreign currency. An NRI can also use the
money in his/her credit, in non-resident external (NRE) rupee or non-resident
ordinary (NRO) or foreign currency non-resident (FCNR) account, maintained in
India.
NRIs are allowed to purchase property in India, by availing
home loans in Indian rupees, from banks or housing
finance companies. The home loan can also be granted by the Indian employer
of the NRI employee, for the purpose of financing of the property.
Obtaining a Home Loan
As NRI investment in Indian real estate is only allowed in
residential or commercial properties, banks too, can finance only these
properties. Almost all banks offer home loans to NRIs for buying a house or
constructing one. One can also get a loan, for purchase of land
(non-agricultural), for constructing a house in India.
The application for the home loan can be made online, as well
as offline. The nature of documents that need to be submitted will depend on
whether the NRI is a salaried employee or whether s/he is self-employed. It
will also vary, depending on the NRI’s country of residence. Nevertheless,
copies of one’s passport and visa, passport-sized photographs and proof of
residence in the foreign county, will be required in all cases.
Depending on whether the NRI is salaried or self-employed,
s/he also has to fulfil a minimum period of stay in the country of present
residence, to avail of the home loan. Banks may also insist on an acceptable
co-applicant, or an NRI guarantor. The NRI guarantor too, has to submit
documents pertaining to identity proof, address proof and income proof.
Servicing the Home Loan
EMIs on the home loan can be paid through remittances from
outside India, through a proper banking channel, or by debiting the NRE, or
NRO, or FCNR account. In case the property is let-out, the rental yields can be
used for servicing the NRI home loan. Money transferred to the NRO account from
close relatives, can also be used for servicing the home loans. In case the
property is purchased for self-occupancy, the NRI can avail of a loan against
the FCNR or NRE account deposits, of up to Rs 1 crore, for servicing the home
loan.
Remittances Out of India
An NRI is allowed to repatriate some of the funds, in case
the property so acquired is sold. However, the number of properties (whether
purchased or inherited), for which s/he can remit or send money to India, is
restricted to two.
Moreover, the amount that can be repatriated, cannot exceed
the amount (denominated in foreign currency) received as remittances from
outside India, either for purchase or servicing of the NRI home loan. Under
normal circumstances, an NRI is allowed to remit an amount of USD 1 million in
a year, out of India, from his NRE, NRO, or FCNR accounts, which includes the
amount remitted for sale of a house.
[Source: https://housing.com/blog/2016/04/27/home-financing-options-for-nri-buyers/]
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Created on Dec 31st 1969 18:00. Viewed 0 times.