1. For what purposes can an NRI avail a home loan?
A home loan can be availed by an NRI for any of the following purposes:
a) To purchase a house either ready-built, under construction or from a second owner.
b) For self-construction of a property on a plot of land.
c) To finance the purchase of a plot of land allotted by a society / development authority.
d) For renovation or improvement of an existing property in India.
2. What is the eligibility for obtaining NRI Home Loans?
The eligibility for an NRI is calculated on the same lines as a resident Indian.
Emphasis is placed on the following for an NRI:
a) Qualifications – the NRI applicant has to be graduate
b) Current job profile & past experience
c) Probability of staying abroad for the entire loan tenure
d) Probability of servicing the loan with an extended tenure in case you have to return to India.
3. What is the repayment period for a NRI Home Loan?
The housing finance offered to NRIs normally do not exceed 5 years. However, some HFCs offer loans for a term of 7 years. The repayment for the loan is by way of EMIs. The EMIs begin only after the entire loan is disbursed. In case of a part disbursement,
you pay simple interest at the rate applicable on the loan amount that is disbursed to you.
4. What is the mode of payment for NRI home loans?
The loan towards the home has to be paid upfront for the entire tenure of the loan by way of direct remittances from abroad through normal banking channels or from accounts that are allowed by RBI. Currently, payments are done through NRO, NRE,
NRNR and FCNR accounts. These accounts change on the basis of RBI permissions to each HFC.
5. What are the Tax Benefits applicable to Non-Resident Indians?
No tax benefits are available for NRI customers unless you file returns and hence become eligible to avail the tax rebates available for home loans.
6.What are the documents required for obtaining NRI Home Loans?
NRIs are required to submit additional documents than is normally required for a resident Indian.
- A copy of the passport
- A copy of the works contract (also sometimes referred to as the contract card/labor card)
- The power of attorney (POA). The POA is required because the borrower is not based in India and in such a scenario, the HFC would need a representative ‘in lieu of’ the NRI to deal with as required. Although not compulsory, the POA is usually drawn on the NRI’s parents, wife or children
7. How is the loan reassessed if there is a change in status from Non-Resident
Indian to Resident Indian?
The repayment capacity of the applicant(s) based on resident status is reassessed and a revised repayment schedule is worked out. The new rate of interest will be revised according to the rates for Resident Indian loans (for that specific loan product). This revised rate of interest would be applicable on the outstanding balance being converted. A confirmation letter on the status change is provided to the loan consumer.