With the benefits reaping out on account of stronger currency, India has always been a sought-after destination for Non-Resident Indians (NRI) for the purpose of real estate investments. Although they are not allowed to buy an agricultural land in India but they can surely invest in any kind of property in India and can even avail loan for the purpose of the same. As an NRI you cannot purchase more than two residential properties in India, no such restriction is imposed for commercial properties.
NRIs can avail a loan on account of purchase, construction, renovation of an existing or a new house. Loan can also be availed on the purchase of plot of land for residential purpose.
Eligibility: To apply for a home loan as an NRI, you must be at least a graduate. Some banks even require three years of employment abroad or professional qualification along with graduation degree. Your income is also taken into account for the purpose of accessing your home loan eligibility
Documentation: Following documents are required by an NRI for applying a home loan:
Local Address proof
Details of permanent address in India
Copies of Passport
Salary Certificate (attested from bank in case the salary is not credited to bank)
Work Experience Certificate
Statement of Non resident external (NRE) or Non resident ordinary (NRO) accounts
Power of Attorney to someone in India.
Submitting documents: For the purpose of submission of documents, you need not to visit India. This can be done to the branches available at the country of NRI’s current residence. Moreover online facility is also offered by many banks. But Power of Attorney to someone in India is a mandate to execute operations in India.
Amount of Loan: Different banks offer different amount of loans and have different limits upto which they offer loans.
Loan to value: The ratio of amount of loan to the valuation of property to be acquired is called Loan to value. Generally banks sanctions loan amounts not greater than 80-85% of the valuation of the property. It is largely depend on the gross monthly income of an individual as well.
Duration: The duration of loan for NRI is restricted within a range of 5-15 years. This is due to the fact that they have greater repayment capacity as compared to residents.
Rate of Interest: The Interest rate applicable is same as in case of resident Indians and includes both fixed and floating rate of interest depending upon the choice of borrower.
Loan Repayment: The loan can be repaid in the form of Equated Monthly Instalments only through NRO or NRE account. No other funds can be used other than these and the repayment must be done in Indian currency only. Even the down payment shall be done via these accounts or through normal banking channels. In case of default in the repayment of loan, the bank can seize the property and recover the loan amount.
So, an NRI can surely obtain a home loan after finalizing a property in India but within parameters as prescribed above. Many banks even charge a prepayment as well. So it is advised to make a thorough comparison among different banks on account of interest rate, pre-payment charges, processing fees etc.