Even if you’re living abroad, you might want to have roots in India by getting a house in your home country. And it’s a great investment opportunity as well.
Many lending institutions and banks offer home loan schemes for NRIs to buy a home in India. If you’re a resident of India but were born in the country, you can purchase or build your home in India and can even avail home loan to fund your house purchase.
5 Things NRI Buyers Should Know About Home Loan In India
Here are five things to keep in mind as an NRI applying for a home loan in India:
- NRI Status
To avail home loan from any lender in India as an NRI, you must be an Indian citizen who has lived in India for less than 182 days in the previous financial year.
The Reserve Bank of India defines NRI as an “Indian citizen who holds a valid Indian passport and stays abroad for employment or carrying out business or vocation under the circumstances indicating an intention for an uncertain duration of stay abroad is an NRI.”
Every lender in India follows this definition of NRI, so if you’re planning to get a home loan, you must meet these requirements.
- Eligible Properties
Even if you’re availing of a home loan as NRI, you need a mortgage for your home loan. Properties eligible for a home loan mortgage include:
- Residential plots
- Property ready for possession or under construction
- Alterations to the existing property
- Tenure And Rate Of Interest
NRIs can get a home loan with a maximum tenure of 30 years. However, most financers grant the loan for just 5 to 15 years, and extension of this tenure is solely up to the lender.
The interest rate on NRI home loans is much higher owing to the higher risk involved. Usually, a margin of 0.25 to 0.50% is charged on these home loans. You can calculate the EMI for your house loan using the online loan calculator available on any lender’s website.
- Home Loan Eligibility Criteria
You need to meet the following criteria to be eligible for a home loan in India.
- Should be a non-resident of India or a person of Indian origin
- Should be between 21 to 60 years of age
- The loan can be availed for buying a new home, a plot of land to construct a home or to make repairs and renovations to your existing home
- If you’re salaried, you should be employed for at least one year overseas
- If you’re self-employed, you should have maintained your current business for at least three years overseas
NRIs can only get a home loan with a resident Indian as a co-applicant. The primary applicant, as the NRI, has to issue a power of attorney in the name of the co-borrower. The co-borrower can be a family member or relative residing in India.
- Documents Required For Home Loan
While every home loan scheme needs a specific set of documents when applying for the loan, there are certain standard documents you need for every NRI home loan application:
- Filled application form
- Identity proof, such as passport or aadhar card
- PAN card
- Proof of income for salaried individuals:
Six months’ salary slips
Six months’ domestic NRE/NRO account statement
Six months’ international salary account statement
- Proof of income for self-employed
Last two years’ ITR profit and loss statement and balance sheet with CA seal and sign
Tax Audit Report, if the gross turnover is more than Rs 1 Cr or gross receipts are more than 25 lakhs.
Six months’ bank statements of personal and business accounts
India is rapidly growing, with ever-increasing real estate prices making it great to invest in a home. And if you want to be close to your home country without actually living in India, purchasing a home is the best solution. You can easily avail a home loan from any financial institution in India as long as you are eligible to own a house in the country.
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