When it comes to define an NRI (Non-Resident Indian), all banks and financial institutions proceed with the same definition specified by the RBI and IT Act, that “An Indian citizen who holds a valid Indian Passport and stays in abroad for employment, or carrying out a business which indicates an intention for an uncertain duration of stay abroad is an NRI”.
The sale and purchase of property in India by NRIs are fully regulated under the Foreign Exchange Management Act (FEMA), 1999. All the necessary regulatory frameworks and instructions are issued by the RBI, and many times FEMA also empowers the RBI to frame necessary regulations for NRIs from time to time for sale and purchase of property in India.
So, the NRI home loans is offered to those who are employed or carrying out any business outside India, who is posted abroad by the Indian government or who is serving in the international agencies like the UN, World Bank, etc.
Generally, an NRI home loan follows the same system and structure as a normal process of home loan in India, the only difference lies in the interest rate and tenure. The interest rate for NRI home loans is slightly on the higher side and the loan tenure is lower in comparison to the normal home loans provided to Indian residents.
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Benefits of NRI Home Loan
An NRI can avail a home loan to fulfill and meet various purposes like purchasing a house or property or renovating an old property in India. There is no need to go multiple times to India to apply for a home loan as many lenders have branches in places like Singapore, Dubai, etc. and you can apply for the loan online from any corner of the world, and can track the application status as well.
There are many Lenders who offer appealing interest rates on a monthly reducing basis, and you are also free to choose between fixed and floating interest rates.
Many Lenders offer a part-prepayment facility with no extra fees, and in addition to all this you can get the estimate of your home loan amount and EMIs online.
The procedure for NRI home loan is quick and transparent. However, an NRI is required to introduce a General Power of Attorney in favor of a resident Indian who would act on your behalf to the lender.
NRI Home Loans Eligibility Criteria
The level of income and educational qualification plays a critical role in deciding your loan eligibility. Some banks consider graduation as a minimum qualification in order to apply for an NRI home loan as through this; a lender basically wants to know that whether you are on a deputation basis or have been permanently employed in the foreign land.
Banks take your net income into consideration i.e. income left after paying taxes abroad while deciding to give approval for NRI Home Loan.
Prerequisite for NRI Home Loans
In order to avail an NRI home loan, the minimum age of the borrower should be 21 years and the maximum age limit is 60 years whichever is earlier at the time of maturity of the loan. You need to submit the last three months of salary slips, and bank statement of your salaried account to the lender.
In addition to all this, a local resident Indian has to be a co-borrower, or a co-owner of the property, and a part of the same application. A co-applicant or a guarantor is compulsory for NRI to apply for home loans in India with certain exceptions. The guarantor of the loan is a must when a local resident is not available as a co-applicant.
Documents Required For NRI Home Loan:
The documentation process for resident and NRI differ. The general document required for NRI home loans is your visa, copies of passport, your work permit, contract of employment, work experience certificate, salary certificate etc. Your salary certificate should be duly signed and attested from the embassy if the salary is not getting credited to your bank.
Repayment of loan:
The repayment of NRI home loan can only be made through Non-Resident Ordinary (NRO) or Non-Resident External Accounts with remittance from abroad. The repayment needs to be made only in Indian currency only; no other mode of funds is acceptable.