NRI Loans For Buying Homes In India – The Important Facts You Should Know

by Arjit Chalmela Finance Student

Buying a property can cost you lakhs of rupees but it is an asset which appreciates in value, over time. The rates of real estate investments are increasing with every passing day which is why most people have to rely on home loans. Banks offer loans to both, resident Indians as well as Non-Resident Indians, thus making it possible to buy a home despite the increasing property rates. If you are an NRI looking to buy a home, here are some facts about NRI loans for home purchase that you should know.

1.      You need an NRI bank account to avail a loan

Every bank has its own set of requirements when it comes to providing different services, including loans. To qualify for any kind of loans, NRIs are required to open an NRI bank account. This could either be a Non-Resident Ordinary Rupee (NRE) or Non-Resident External Rupee (NRO account) or even a Foreign Currency Non-Resident (FCNR) fixed deposit.

2.      You can get two types of loans for homes

While resident Indians can avail a wide range of home loans, the home loans for NRIs are a bit limited. NRI loans are available for purchasing a property or for the purpose of remodelling a home. You can purchase under-construction properties as well as properties up for resale. A few banks may also offer home construction loans. The remodelling loan can help you redecorate or reconstruct the interiors of your home.

3.      You need to check if you are eligible for the loan

Each bank has its own eligibility criteria. The basic requirements for one to avail an NRI loan for house purchase or remodelling is that they need to be NRIs, POIs or OCIs i.e. employed with the merchant navy overseas. Also, you should be above the age of 18 years and your maximum age at the time of loan repayment cannot exceed 70 years. You can be a self-employed individual or a salaried professional to be eligible for the loan.

4.      You would need to assign a Power of Attorney to manage the loan

Most banks offering home loans to NRIs insist that you appoint a resident Indian (preferably a close family member) as your Power of Attorney. The PoA is your liaison in India who the bank can reach out to in your absence and communicate any issues regarding the property purchased/remodelled. The PoA is also the person the bank approaches in case of defaults on EMI repayment.

5.      You have the pay the necessary fees and charges

Every loan, including an NRI loan comes with its own set of fees and charges. There are a lot of managerial costs that the bank has to incur to process a loan, which is why these costs are passed on to the borrower. Some of the most common types of charges associated with home loans include loan processing fees, property evaluation fees, administrative charges, stamp duty fees, etc.

6.      The interest rates and tenures are the same as applicable to resident Indians

Since the loan is for purchasing/remodelling properties in India, the interest rates available to NRIs are the same as those quoted to resident Indians. The same also applies to loan tenures. Typically, you can get loans at interest rates as low as 8.25% p.a., with tenures of up-to 30 years to repay the loan

Final word: To ensure that your NRI loan in India is passed without hassles, make sure you fill the loan application properly and provide all the documents your lender asks for. Also, ensure your credit score is above 750+ to negotiate lower interest rates. 

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Created on Dec 17th 2019 02:45. Viewed 276 times.

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