A person staying in London is desirous of purchasing a house in India and he requires funding. He calls up his friend in India to enquire about the possibility. The Indian friend realizes that this can be done through NRI Housing Loan, but he does not know the entire process. A wide variety of options are provided by both banks and NBFCs to avail such funds. This article will help understand all that one requires to know about. Housing Loans for NRIs.
Who is an NRI…
NRI as defined by FEMA (Foreign Exchange Management Act) is,
- A citizen of India holding a valid Indian Passport,
- residing outside India for the purpose of employment or carrying a business or vocation,
- whose parents or grandparents were/are citizens of India,
- who has spent less than 182 days in India in the preceding year.
- In terms of age, salary and work experience
- An NRI needs to meet minimum (and maximum) age criteria and the criteria of minimum years of working experience. Although these criterias vary from bank to bank, an individual should be at least 18/25 years old (and at the most 60 – 70 years old) with minimum work experience of 1/2 years. These criterias along with salary criterias depend upon the country you are staying and the bank that you have chosen for applying the loan.
- In terms of properties eligible for loan
- Home loans by NRIs can be availed for:
- Any new property that is ready for possession
- Residential house which is either under construction or on resale
- Buying a residential plot
- Repairing or renovating an already existing house or apartment and covering the cost of money you spent for your house in the preceding one year.
- Maximum amount of Loan
- 75-80% (depending on the flat value) of the cost of residential property as a home loan
- Repayment Mode (Down Payments and EMIs)
- Direct remittances from abroad via normal banking channels
- Non-Resident External (NRE) account and/or Non-Resident Ordinary (NRO) account in India.
- Interest Rates
- Varies from bank to bank (higher than resident Indians)
- Loan Tenor
- Generally between 5-15 years
- Any extension beyond this term is solely at the discretion of the bank and in exceptional cases only
Apart from the usual documents required for a home loan, the NRIs have to submit these additional documents:
- Copies of Passport and Visa
- Appointment Letter and Employment Contract (if any)
- Work Experience Certificate
- Overseas address proof
- Last 3-6 months’ salary slip
- Copy of local income tax returns (ITR) filed in the country of residence for last 3 years
- General Power of Attorney (GPA) in favor of local (Indian) resident duly attested and registered by Indian embassy in foreign country
- Loan NOC/Loan track (if any)
- Copy of Work permit (For Self Employed)
- Last 3 years’ ITR with balance sheet attested by C.A. (For Self Employed)
- Last one year’s original bank account statement (For Self Employed)
- A Cheque for processing fees
Having understood these details, you can easily guide your NRI friends in the best possible fashion. It could be a good investment opportunity for your loved ones.Usage of platform like CapitaWorld to avail the best loans is surely a benefit.