Five things to keep in mind while applying for NRI Home Loans

Author: Litty Jose

Non-resident Indians or NRIs as they are more fondly known are constantly looking for ways to invest in their home country. It’s a great way to stay connected to your roots but more importantly an investment back home can supplement your income a great deal. A great way to invest in India is to buy residential property. Property rates are always soaring and are rarely, if ever down. Property is considered a great investment not only for NRIs but for resident Indians too.

But to purchase property in India you may need to opt for a loan. Being an NRI and dealing with a bank in your native country can be quite a task. NBFCs and banks have introduced home loans for NRIs in India for this exact purpose. NRI home loans as the name suggests are designed to fit the specific needs of those who do not live in the country but wish to invest in it.

So if you’re an NRI and are considering taking out a home loan then here are a few things you need to know about them.

  1. An NRI is defined by the RBI as a person who holds a valid passport but is immigrating to another country for an undecided period of time, for employment purposes or to carry out a business. Only a person who is employed or has a business outside India is eligible for an NRI home loan.
  2. The amount that is sanctioned to you as a loan will greatly depend on your educational qualifications and overall income. Normally a loan is sanctioned for 80% to 85% but the amount sanctioned will be decided on the basis of your monthly income.
  3. The home loan interest rate in India for NRI’s is normally higher than the interest rate that is offered to residents. This is due to the increase in risk factors. Normally, the difference ranges from 0.25 to 0.5%.
  4. The documents required for an NRI home loan are largely similar to the ones required for any other loan. An NRI will additionally require his/her passport, Visa, work permit, employment proof etc.
  5. All payments towards this loan need to be done in the Indian rupee and not the currency of the NRIs current residence.

Purchasing a property in India may require on to opt for a housing loan, but taking into consideration the aforementioned points and elements, you are covered with the basic guidelines.