Whether you are Kartar Singh, a logistics business owner from Ontario or Makrand Shinde, a retired government servant in Mumbai, owning a luxurious home is one of the few common interests that bind people together. Over the years, India has become a hotbed for property investments among non-resident Indians (NRIs) like Kartar Singh, and people like Makrand Shinde.
When it comes to buying a home, the factor of home loan comes into the picture. However, do you know the terms for NRI home loan is slightly different from a regular home loan? Do you want to know more about the NRI home loan benefits? What are the peculiar features of this home loan? Keep reading to know some interesting tips before taking NRI home loan.
NRI Home Loan – Who is Eligible for It?
Any NRI having an Indian Passport or a Person of Indian Origin (PIO) or an Overseas Citizen of India (OCI) having a foreign passport is eligible for an NRI home loan. PIOs can apply individually or along with their spouses or their NRI relatives.
PIO (Person of Indian Origin) is a term for non-Indian citizens with 15-year visa.
OCI is a term that refers to citizens from countries other than Pakistan, Bangladesh, Afghanistan, Sri Lanka, Nepal, Iran, China, and Bhutan, who may have held an Indian passport at any time of their lives or who may have parents or grandparents, who were citizens of India by virtue of the Citizen Act, 1955 or who may have Indian spouses. This term is also applicable to non-Indian citizens who have a lifetime visa to work in India.
An NRI having a foreign passport must intimate the Reserve Bank of India (RBI) within three months of purchase of the property. Most times, this intimation is made by the financing bank or the HFC.
What are the Conditions for Sanctioning NRI Home Loans?
NRI home loans are sanctioned to those, who want
- To purchase a ready-to-occupy or under construction flat or home
- To construct a home or flat on his/her land
- To purchase land for construction of the house (within two years of availing the loan)
- To renovate or repair the house on a large scale
- To take-over housing loan taken from other banks
Documents to be Submitted for Loan Processing
The documentation requirements may vary across different banks, however, the following are some common documents that an NRI applying for a home loan is required to submit :
- Copy of the passport with the visa stamp and copy of a valid visa
- Loan application document in the prescribed format
- Asset and liabilities document of the person applying for a loan
- Proof of residence
- A copy of works contract or employment contract ( if you are a salaried individual)
- A Power of Attorney (POA) that is notarized, as well as attested by Indian Consulate or an Indian Embassy
- Copy of the Agreement or title deeds to the sale (if applicable)
- An estimation by Civil Engineer
At times, the Housing Financing Company (HFC) may require a representative who will act on the behalf of the NRI, as the loan seeker is not living in India.
Things You Should Know About NRI Loan Repayment Period and Mode
Any NRI who is above 18 years of age and a maximum of 60 years of age is eligible for the loan. The minimum loan repayment period is five years, and the maximum is 30 years. Some HFCs have set the minimum loan repayment period up to 7 years.
Like any other regular home loan, EMI is the popular way of loan repayment. The EMI begins after the loan disbursement. Sometimes, standard interest rates will be levied on part loan disbursements. The EMIs can be paid through bank accounts or accounts such as NRE, NRO, FCNR, or NRNR – that are permitted by RBI.
Giving power of attorney to someone you trust…
If you have someone you can trust to overall manage your finances, it becomes a better choice for you to give that person the ‘Power of Attorney’. The person with such authority can buy or sell properties and even manage your loan on your behalf. Please note that the POA holder cannot open any new bank accounts on your behalf but just can manage your loans and transactions.
After gaining insight into benefits of NRI home loans, it is important to make the right investment at the right time. Several cities in India offer you the best value for investment. Pune is one such city where property investments will bring you high ROI over a long time.